On Wednesday, KeyBanc has increased the stock price target for Fiserv (NYSE:FI) shares to $225 from the previous $180, while maintaining an Overweight rating. This adjustment follows Fiserv's third-quarter financial results for 2024, which presented a complex picture.
Although the company's revenue fell short of market expectations, its adjusted earnings per share (EPS) and updated full-year 2024 guidance surpassed analyst predictions.
The company's Merchant Solutions segment experienced stable growth sequentially, albeit below analyst forecasts. This was supported by a consistent rise in Clover revenue, which saw a 28% year-over-year increase, and an accelerated 17% year-over-year growth in Enterprise, attributed to the ramp-up of new business.
However, Clover's Gross Payment Volume (GPV) growth slowed down to 15% year-over-year in the third quarter from 17% in the second quarter. Management attributed this deceleration to a moderation in consumer spending, noting that the slowdown was more pronounced than in the broader small and medium-sized business (SMB) category, likely due to Clover's significant presence in the U.S. market.
The Financial Solutions segment's revenue growth also experienced a slight deceleration, coming in below analyst expectations but remaining within the forecasted range for the full year. The company has raised its revenue and adjusted EPS guidance for 2024 at the lower end of its previous projections.
Moreover, Fiserv has improved its operating margin expansion outlook to greater than or equal to 150 basis points, compared to the earlier forecast of over 135 basis points. Free cash flow (FCF) projections have also been revised upward.
The positive revisions in Fiserv's financial outlook and performance metrics are likely the driving factors behind the stock's performance on Wednesday. KeyBanc's updated price target reflects the firm's assessment of Fiserv's adjusted full-year guidance and its implications for the company's future financial health.
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