On Thursday, B.Riley maintained a Buy rating on Fiserv (NYSE:FI) and raised the price target to $185 from $180. The revision followed Fiserv's announcement of its second-quarter financial results on Wednesday, before the market opened. The company showcased a robust performance with organic revenue growth of 18% year-over-year, marking a continuation of double-digit growth for the fourth consecutive quarter.
Fiserv reported an adjusted EPS of $2.13 for the second quarter, surpassing B.Riley's forecast by 6 cents. The company's adjusted EBIT margins expanded by nearly 160 basis points, contributing to the earnings beat.
In response to the strong results, Fiserv has increased its full-year margin expansion guidance by 10 basis points and adjusted its EPS forecast range upward by 5 cents. However, the company's revenue growth targets remain unchanged at 15%-17% for organic growth.
The firm also announced an enhancement to its free cash flow (FCF) expectations, raising the target by $200 million to $4.7 billion. B.Riley's new price target for Fiserv is grounded on an updated EPS forecast for 2025 and a slightly higher EPS multiple.
The analyst from B.Riley highlighted Fiserv's consistent execution in driving software-driven sales growth and margin expansion as justification for a higher multiple, especially as the company's technology-led content increases and inflation pressures subside.
Prior to the pandemic, Fiserv's shares typically traded at a high-teen or low-20 times multiple. B.Riley anticipates a return to these valuation levels from the depressed multiples seen since mid-2021.
The global growth potential of Clover, Fiserv's payment processing platform, is seen as a significant factor that is currently not reflected in the company's share price, according to the analyst's comments.
In other recent news, Fiserv Inc (NYSE:FI). saw its price target lifted to $187 by Argus, following strong earnings and an enhanced financial outlook for 2024. The company reported adjusted earnings per share of $2.13 for the second quarter, surpassing expectations.
Fiserv's operating margins expanded due to effective cost control measures, contributing to this strong performance. The firm also updated its 2024 operating margin expansion goals, aiming for a minimum of 135 basis points. This revision is part of the company's raised projections for 2024 adjusted earnings per share, which are now set at $8.65-$8.80.
In other recent developments, Fiserv reported a 31% increase in second-quarter earnings, leading to an upward revision of its full-year profit forecast. The company's second-quarter processing and services revenue rose to $4.14 billion, while total quarterly revenue increased by 7.4% to $5.12 billion, exceeding estimates.
Fiserv also reported earnings of $894 million or $1.53 per share for the quarter ending June 30, marking a significant increase from the previous year.
Several analyst firms, including RBC Capital, Deutsche Bank, and BMO Capital, have revised their outlook on Fiserv following these results. Despite economic challenges in Argentina impacting Merchant Solutions revenue, Fiserv reported solid adjusted revenue growth in this segment, alongside a noticeable quarter-over-quarter improvement in the momentum of Financial Solutions.
InvestingPro Insights
As Fiserv (NYSE:FI) continues to impress with its financial performance, InvestingPro data and tips provide a deeper dive into the company's market standing. With a robust Market Cap of $94.3B and a P/E Ratio standing at 27.25, Fiserv is trading at a valuation that reflects its strong market presence. The company's growth is further underscored by a Revenue Growth of 7.2% in the last twelve months as of Q2 2024, showcasing its ability to increase earnings over time.
InvestingPro Tips highlight that Fiserv is not only a prominent player in the Financial Services industry but also has been trading near its 52-week high, indicating investor confidence in the stock. Moreover, analysts predict the company will be profitable this year, a sentiment backed by a solid track record of profitability over the last twelve months. Additionally, Fiserv has delivered a high return over the last decade, reinforcing its position as a strong investment candidate. It's worth noting that Fiserv does not pay a dividend, which may appeal to investors looking for companies that reinvest earnings back into growth opportunities.
For those seeking comprehensive analysis and additional insights, InvestingPro offers more tips on Fiserv at https://www.investing.com/pro/FI. Readers can use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, accessing a wealth of information to inform their investment decisions. With several more InvestingPro Tips available, investors can gain a nuanced understanding of Fiserv's market dynamics and potential growth trajectory.
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