Fiserv (FI, Financial) maintained its fiscal 2025 guidance while delivering first-quarter results that met expectations, a noteworthy achievement given the current economic uncertainty. However, the company's Clover platform reported a revenue growth of 27% and an annualized volume growth of 8%, figures that fell short of expectations and are seen as disappointing by analysts at BTIG.
The tepid performance of Clover in the first quarter has raised concerns about Fiserv's ability to achieve its reaffirmed long-term targets. Despite this, BTIG attributes some of the softness in Clover's results to one-time challenges encountered during the quarter and maintains a positive outlook on Fiserv’s overall business model, citing its potential for double-digit earnings growth regardless of macroeconomic conditions.
In light of these developments, BTIG continues to recommend a Buy rating on Fiserv with a price target of $240. Despite this optimistic long-term perspective, Fiserv's stock is experiencing pressure, dropping 16% in midday trading, equating to a decline of $35.79, thereby bringing the stock price to $181.31.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 34 analysts, the average target price for Fiserv Inc (FI, Financial) is $242.75 with a high estimate of $300.00 and a low estimate of $136.00. The average target implies an upside of 34.11% from the current price of $181.01. More detailed estimate data can be found on the Fiserv Inc (FI) Forecast page.
Based on the consensus recommendation from 37 brokerage firms, Fiserv Inc's (FI, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Fiserv Inc (FI, Financial) in one year is $159.49, suggesting a downside of 11.89% from the current price of $181.01. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Fiserv Inc (FI) Summary page.
FI Key Business Developments
Release Date: February 05, 2025
- Adjusted Earnings Per Share (EPS): $8.80, up 17% year-over-year.
- Adjusted Revenue Growth: 7% for the year.
- Adjusted Operating Margin: Increased by 170 basis points to 39.4%.
- Total Company Organic Revenue Growth: 16% for the year.
- Free Cash Flow: $5.2 billion for the year.
- Share Repurchase: $5.5 billion returned to shareholders in 2024.
- Merchant Solutions Organic Revenue Growth: 23% in Q4 and 27% for the full year.
- Clover Revenue: $2.7 billion in 2024, with 29% growth in both Q4 and full year.
- Financial Solutions Organic Revenue Growth: 4% in Q4 and 6% for the full year.
- Adjusted Operating Margin for Financial Solutions: 47.3%, a 130-basis-point improvement.
- Debt to Adjusted EBITDA Ratio: 2.6 times as of December 31.
- 2025 Guidance - Organic Revenue Growth: 10% to 12%.
- 2025 Guidance - Adjusted EPS Growth: 15% to 17%.
- 2025 Guidance - Free Cash Flow: Approximately $5.5 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fiserv Inc (FI, Financial) reported a strong financial performance with adjusted earnings per share of $8.80, up 17% year-over-year.
- The company achieved a total organic revenue growth of 16% for the year, driven by diverse revenue streams and strategic initiatives.
- Fiserv Inc (FI) successfully expanded its merchant acquiring services, adding 65% more bank partners in 2024 compared to the previous year.
- The company launched new products and services, including CashFlow Central, which addresses cash flow management challenges for small businesses.
- Fiserv Inc (FI) formed strategic partnerships, such as with ADP, to enhance its product offerings and expand its market reach.
Negative Points
- The company faces challenges from currency fluctuations, particularly the devaluation of the Argentine peso, impacting revenue growth.
- There is a reliance on transitory factors from Argentina, which contributed to organic revenue growth but are expected to stabilize in 2025.
- Clover's growth, while strong, showed some deceleration in gross payment volume, raising concerns about sustaining high growth rates.
- The issuer segment within Financial Solutions experienced a slowdown, attributed to timing issues and market conditions.
- Fiserv Inc (FI) anticipates higher interest expenses in 2025 due to refinancing and growth in merchant cash advances.
