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On Thursday, Redburn-Atlantic downgraded Fiserv stock, a financial services technology company, from Neutral to Sell. The firm also significantly reduced the price target for Fiserv shares to $150 from the previous figure of $220. Currently trading at $210.11, InvestingPro analysis indicates the stock is slightly overvalued, despite its impressive 42.83% return over the past year. The broader analyst community maintains targets ranging from $145 to $300. The downgrade comes despite Fiserv’s apparent exposure to large, non-discretionary merchants which might suggest a degree of resilience in a challenging macroeconomic environment. With a substantial market capitalization of $117.36 billion and a GOOD Financial Health Score from InvestingPro, the company maintains a strong position in the financial services sector.
Fiserv’s position in the market is somewhat paradoxical according to Redburn-Atlantic. While the company is associated with large merchants like Walmart (NYSE:WMT), which are essential and less impacted by discretionary spending, Redburn’s analysis indicates that most of Fiserv’s growth actually stems from smaller merchants whose business is more discretionary in nature. Recent data shows the company achieving 7.14% revenue growth in the last twelve months, with a robust gross profit margin of 60.83%. Discover more detailed insights about Fiserv’s growth metrics and 8 additional key ProTips with an InvestingPro subscription.
The research firm points out that although these large merchants do produce a high volume of payments, they have lower take rates, which is the percentage of transaction value that Fiserv earns. Consequently, these larger merchants contribute less to the company’s net revenue growth compared to smaller, discretionary-orientated merchants.
Fiserv’s downgrade by Redburn-Atlantic reflects a nuanced view of the company’s revenue composition and growth drivers. The firm’s analysts suggest that the perceived safety of Fiserv’s association with large, stable merchants may not accurately represent the company’s financial outlook.
The new price target of $150 set by Redburn-Atlantic represents a significant adjustment from the previous target of $220, indicating a change in expectations regarding Fiserv’s future performance in the context of the current economic landscape.
In other recent news, Fiserv Inc (NYSE:FI). announced its first-quarter and full-year 2025 financial projections, with BMO Capital Markets maintaining an Outperform rating on the company despite lowering its price target to $254. BMO Capital’s projections are more optimistic than the consensus, highlighting higher anticipated share buybacks and stable gross profit margins. Additionally, Fiserv has authorized a new share repurchase program for 60 million shares, adding to its existing buyback capacity. In executive developments, Takis Georgakopoulos has been appointed as the new Chief Operating Officer, succeeding Guy Chiarello, who transitions to Vice Chairman. Fiserv also welcomed Stephanie Cohen to its Board of Directors, bringing her extensive experience in strategy and technology from her role at Cloudflare (NYSE:NET). On the client front, Republic Bank & Trust Company selected Fiserv’s DNA platform to enhance its digital transformation efforts, aiming to improve operational efficiencies. This partnership underscores Fiserv’s commitment to community banking and technological innovation. The company’s diversified offerings continue to be recognized, with the DNA platform receiving accolades for its advanced technology.
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