What’s Really Driving the Fiserv Stock Rout After Beating Q2 Earnings

Fiserv (NYSE:FI) shares tumbled over 16% in early trading Wednesday despite the payment processor delivering a solid second-quarter earnings beat. The Milwaukee-based company reported adjusted earnings per share of $2.47, exceeding analyst estimates of $2.43, while revenue of $5.52 billion surpassed consensus expectations of $5.2 billion. However, investors focused on the company’s decision to lower its full-year organic revenue growth guidance, raising concerns about the strength of its merchant solutions business and overall growth trajectory for the remainder of 2025.

FI Lowers Guidance Despite Strong Quarter

The primary catalyst for Wednesday’s selloff was Fiserv’s decision to narrow its full-year 2025 organic revenue growth outlook to “approximately 10%” from its previous guidance range of 10% to 12%. This guidance reduction came despite the company delivering 8% organic revenue growth in both the second quarter and first six months of 2025.

CEO Mike Lyons attributed the refinement to “year-to-date performance and current business activity levels,” while emphasizing progress on strategic initiatives focused on client-centric innovation and operational efficiency.

The guidance cut is particularly concerning given that Fiserv has historically delivered consistent double-digit adjusted earnings per share growth for 39 consecutive years. While the company maintained its adjusted EPS outlook of $10.15 to $10.30 (representing 15% to 17% growth), analysts are questioning whether the company can achieve its ambitious long-term growth targets.

The lowered revenue guidance suggests potential headwinds in the company’s core business segments, particularly as competition intensifies in the payments processing space.

Mixed Earnings Results Highlight Merchant Segment Weakness

While Fiserv’s overall financial performance appeared strong on the surface, a deeper dive into segment results revealed troubling trends in the merchant solutions business.

The Merchant Solutions segment posted 9% organic revenue growth, but operating margins declined significantly to 34.6% from 36.6% in the same period last year. This margin compression is particularly worrying given that merchant processing typically carries higher margins and represents a key growth driver for the company.

In contrast, the Financial Solutions segment showed more resilient performance with 7% organic growth and improved operating margins of 48.7% compared to 45.9% in the prior year.

The company generated strong free cash flow of $1.54 billion in the first six months and returned significant capital to shareholders through share repurchases of $2.2 billion in the second quarter alone.

However, analysts remain focused on the merchant business weakness.

FI Stock Takes a Double Digit Hit

As of Wednesday morning, Fiserv shares were trading at $138.12, down $27.86 or 16.79% from the previous close of $165.98. The dramatic selloff reflects investor disappointment with the guidance reduction and concerns about margin pressure in the merchant business. The stock had been trading near its 52-week high of $238.59 before the earnings announcement, making the decline particularly steep for long-term holders.

Key metrics show the stock trading at 24.49 times trailing twelve-month earnings with a market capitalization of $76.576 billion. The company’s beta of 0.92 suggests it typically moves less volatilely than the broader market, making Wednesday’s 16%+ decline even more significant. With analyst price targets averaging around $215.35, there appears to be a significant disconnect between current trading levels and Wall Street’s longer-term expectations, though the guidance cut may prompt analysts to reassess their forecasts in the coming days.

***

Looking to start your trading day ahead of the curve? Get up to speed before the bell with Bull Whisper—a sharp, daily premarket newsletter packed with key news, market-moving updates, and actionable insights for traders.

Start your day with an edge. Subscribe to Bull Whisper using this link.