Wells Fargo has maintained its Overweight rating on Fiserv (NYSE:FI) (NYSE: FISV) and increased the price target to $220 from $215. The financial services technology company has seen its shares climb by more than 50% year-to-date, outperforming the S&P 500's 23% gain.
The analyst at Wells Fargo cited the consistent top-line and earnings per share growth algorithm as a factor that continues to attract increasing appreciation from investors.
Fiserv's growth opportunities, including Small and Medium-sized Business (SMB) bundling, Cash Flow Central, Commerce Hub, and Experience Digital, are seen as contributing to the company's incremental credibility in meeting its mid-term targets. The analyst expects that the company's resilience will be reflected in a further convergence of its multiple versus competitors Visa (NYSE:V) and Mastercard (NYSE:MA) in the mid-term.
For the fiscal year 2024, management at Fiserv has raised the lower end of its guidance across the board, despite the diminishing benefits from excess inflation and interest impact. The updated fiscal year 2024 guidance includes organic growth of 16-17% (improved from the previous 15-17%), adjusted revenue growth of 7-8% (up from 6-8%), and adjusted earnings per share of $8.73-8.80, representing a 16-17% increase (previously $8.65-8.80 with a 15-17% increase).
In other recent news, Fiserv has displayed a robust financial performance, with third-quarter results revealing a 17% year-over-year increase in adjusted earnings per share (EPS) to $2.30, and a 7% growth in adjusted revenue to $4.9 billion.
The company's Merchant Solutions segment displayed a remarkable 24% organic revenue growth, leading Fiserv to raise its full-year guidance for organic revenue growth to 16%-17% and adjusted EPS to $8.73-$8.80. In the wake of these results, Baird has increased its price target on Fiserv shares to $220, maintaining an Outperform rating, while Jefferies raised its price target to $200, maintaining a hold rating, and CFRA upgraded Fiserv's status from Buy to Strong Buy, raising the price target to $235.
Fiserv's strong performance was supported by the success of its Clover payment system, which reported a year-over-year increase of 28%. The company also announced a partnership with DoorDash (NASDAQ:DASH), initiated a proof of concept with Walmart (NYSE:WMT), and expanded its Clover offerings. These initiatives are part of Fiserv's efforts to enhance its financial services offerings and improve cash flow management for businesses. These are the latest developments in Fiserv's growth trajectory.
InvestingPro Insights
Fiserv's strong market performance, as highlighted in the article, is further supported by real-time data from InvestingPro. The company's market capitalization stands at an impressive $114.96 billion, reflecting its significant presence in the financial services technology sector.
InvestingPro Tips indicate that Fiserv is trading near its 52-week high, which aligns with the article's mention of the stock's substantial year-to-date gain of over 50%. This performance is also evident in the company's strong returns, with a remarkable 82.16% price total return over the past year and a 50.31% return year-to-date.
The company's profitability, as noted in the article's discussion of raised guidance, is reinforced by InvestingPro data showing a robust gross profit of $12.29 billion and an operating income margin of 28.14% for the last twelve months as of Q3 2024. These figures support management's confidence in meeting their mid-term targets.
However, investors should note that Fiserv is trading at a relatively high P/E ratio of 37.99, which may indicate that the stock is priced at a premium compared to its earnings. This valuation metric could be important for investors considering the stock's future growth potential versus its current price.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for Fiserv, providing a deeper insight into the company's financial health and market position.
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