Fiserv stock price target lowered to $200 at KBW

On Wednesday, Keefe, Bruyette & Woods (KBW) adjusted their outlook on Fiserv (NYSE:FI) shares (NYSE: FISV), reducing the price target from $240.00 to $200.00. Despite the lower price target, KBW maintained an Outperform rating on the stock. The adjustment follows a 23% decline in Fiserv’s share price since the company reported its first-quarter results. The drop was attributed to a significant slowdown in the volume growth of Clover, Fiserv’s payment processing platform, and the company’s indication that this trend would not accelerate in the second quarter. Despite these concerns, Fiserv maintains strong fundamentals with an impressive 61% gross profit margin and $9.2 billion in EBITDA for the last twelve months.

KBW’s analyst believes that the market has overreacted to the news about Clover’s performance. The revenue targets for Fiserv remain unchanged, suggesting that the market has undervalued the stock due to the anticipated mix shift in Clover’s revenue. The firm’s analysis indicates that the current valuation does not reflect the company’s true potential.

The analyst from KBW provided insight into their valuation method, stating, "Our sum-of-the-parts (SOTP) analysis suggests potential for 20% upside from current levels." This analysis implies that the market has disproportionately penalized Fiserv’s stock, and there is a significant opportunity for recovery in its share price.

Fiserv’s recent performance has been in the spotlight due to the unexpected deceleration in Clover’s volume growth. This has been a key factor in investor sentiment, as Clover is a vital component of Fiserv’s overall business model and future growth strategy.

Investors and market watchers will be keeping a close eye on Fiserv’s upcoming second-quarter results to see if the company can meet its revenue targets and address the concerns surrounding Clover’s growth trajectory. InvestingPro analysis suggests the stock is currently undervalued, with 38% potential upside based on analyst targets. For deeper insights into Fiserv’s valuation and growth prospects, including 10+ additional ProTips and comprehensive financial metrics, check out the full Pro Research Report available on InvestingPro.

In other recent news, Fiserv’s financial performance and strategic developments have captured significant attention. BTIG and Mizuho (NYSE:MFG) Securities have both revised their price targets for Fiserv, with BTIG lowering its target to $215 and Mizuho to $200, while maintaining a Buy and Outperform rating, respectively. These adjustments follow comments from Fiserv’s CFO, Robert Hau, regarding the anticipated 8% growth in Clover’s Gross Payment Volume for the second quarter, mirroring first-quarter growth and falling short of previous expectations. Despite this, Fiserv’s management remains optimistic about stronger performance in the latter half of the year, bolstered by Clover’s international expansion and new product launches like Clover Hospitality.

William Blair has reiterated an Outperform rating on Fiserv, highlighting the success of Clover in the U.S. SMB processing market and its international expansion into four new markets. The analyst cited Clover’s value-added services and extensive distribution network as key advantages. Fiserv’s recent distribution deal with ADP and the diminishing impact of gateway conversion issues were also noted as positive developments.

In corporate governance news, Fiserv shareholders approved executive compensation and elected ten directors at the annual meeting. Deloitte & Touche LLP was ratified as the independent registered public accounting firm for the year. A shareholder proposal to amend the Compensation Recoupment Policy was rejected, reflecting strong shareholder consensus on the company’s current executive pay structure. These developments demonstrate Fiserv’s ongoing efforts to maintain investor confidence and strategic growth in a competitive fintech landscape.

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