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Investing.com - Bernstein downgraded Fiserv (NYSE:FI) from Outperform to Market Perform on Thursday, while dramatically reducing its price target to $80.00 from $205.00 following the company’s third-quarter earnings miss. This downgrade comes as the stock has plummeted 43.05% in just the past week and 65.63% year-to-date, according to InvestingPro data.
The downgrade comes after what Bernstein described as an "abrupt" quarterly miss that has raised questions about the visibility the company has into its own business operations. The research firm expressed particular concern about the underlying health of Fiserv’s financial solutions business. InvestingPro data shows seven analysts have recently revised their earnings downwards for the upcoming period, suggesting broader concerns about the company’s near-term performance.
Bernstein noted that the management’s apparent strategic shift, coming just three months after guidance adjustments, has shaken its confidence in the company. The firm characterized Fiserv as beyond a mere "show-me story," suggesting management must not only deliver on reset numbers but also rebuild credibility damaged by this year’s events. Despite these concerns, InvestingPro data indicates management has been aggressively buying back shares, potentially signaling their confidence in the company’s long-term prospects.
While Clover, Fiserv’s payment platform that had been a source of weakness earlier in the year, showed acceptable performance this quarter, Bernstein expressed surprise at the magnitude of deferred investments and weakness in the financial solutions segment, which was expected to provide stable, recurring revenue. Despite current challenges, Fiserv remains profitable with a diluted EPS of $5.97 over the last twelve months and maintains a solid gross profit margin of 61.14%.
The research firm also flagged governance concerns, noting that the earnings call was conducted by a newly appointed CFO who had not yet officially started his position, alongside the appointment of a new audit committee chair. According to InvestingPro analysis, Fiserv appears significantly undervalued at current levels compared to its Fair Value, with the stock’s RSI suggesting it’s in oversold territory. Investors seeking deeper insights can access the comprehensive Pro Research Report for Fiserv, one of 1,400+ US equities covered with detailed analysis on the platform.
In other recent news, Fiserv has experienced a series of analyst downgrades following its third-quarter earnings miss and reduced guidance. Seaport Global Securities downgraded Fiserv to Neutral from Buy due to the company’s operational "reset" and lowered expectations for 2025, with 2026 described as a "transition year." Morgan Stanley also downgraded Fiserv from Overweight to Equalweight, significantly reducing its price target to $81.00 from $179.00, following announcements of a strategic overhaul by the new management team. Goldman Sachs downgraded the stock to Neutral and cut its price target to $79.00 from $149.00 after Fiserv lowered its 2026 earnings per share guidance by about 30%. TD Cowen downgraded Fiserv to Hold, citing a "baffling" business slowdown and a need for a remediation plan. BTIG also downgraded the company to Neutral, highlighting a significant reduction in the growth outlook and ongoing management changes. These developments reflect widespread concern among analysts about Fiserv’s future performance and strategic direction.
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