Fiserv stock rating downgraded by Morgan Stanley on strategic overhaul

Investing.com - Morgan Stanley downgraded Fiserv (NYSE:FI) from Overweight to Equalweight on Thursday, while significantly reducing its price target to $81.00 from $179.00. The stock, currently trading at $70.60, has plummeted 43% in the past week alone, with InvestingPro data showing the RSI in oversold territory.

The downgrade follows announcements from Fiserv’s new management team, including CEO Mike Lyons and incoming CFO Paul Todd, who outlined a revamped corporate strategy requiring increased investment and a shift in revenue focus. Despite the recent decline, the company maintains a market capitalization of $38.4 billion and generated $21.1 billion in revenue over the last twelve months.

Morgan Stanley indicated the company’s new direction would place less reliance on price increases and short-term revenue drivers such as hardware sales, data sales, and one-time fees, pivoting instead toward building durable recurring revenues and enhancing customer support. The strategic shift comes as Fiserv trades at a P/E ratio of 22.5, which InvestingPro identifies as high relative to near-term earnings growth potential.

The financial services firm noted that these strategic initiatives would likely require at least three to four quarters before producing externally measurable impact, suggesting the changes represent more than just a reset of growth and profitability targets.

Morgan Stanley emphasized that Fiserv will need time, consistent communication, and a clear path to improving performance before investors can rebuild confidence in the company.

In other recent news, Fiserv has faced a series of downgrades from major financial firms following significant developments in its business outlook. Goldman Sachs downgraded Fiserv from Buy to Neutral, adjusting its price target to $79.00 after the company reduced its 2026 earnings per share guidance by about 30%. Similarly, TD Cowen downgraded the stock to Hold, citing a notable slowdown in business performance and reducing its price target to $80.00. BTIG also moved Fiserv to Neutral, highlighting concerns over a halved growth outlook and ongoing management changes that cloud the fiscal year 2026 performance.

Wolfe Research shifted its rating from Outperform to Peerperform after Fiserv’s third-quarter results and lowered fiscal year 2025 guidance, expressing concerns over the company’s structural issues. Jefferies maintained its Hold rating with a $125.00 price target, emphasizing the need for a cultural shift within Fiserv due to its short-term focus. These downgrades reflect a broader concern among analysts about Fiserv’s future performance and strategic direction.

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