Fiserv Exceeds Q4 Expectations; Shares Drop 6%

Fiserv, Inc. (NASDAQ: FISV) reported better-than-expected fourth-quarter results outpacing expectations on both its top and bottom lines.

However, shares fell 6%, closing at $99.54 on February 8, after the company’s conservative guidance for FY22 came in line with the expectations.

Fiserv, a Fortune 500 company, engages in the business of financial technology and financial services. Its shares have lost 13.5% over the past year.

Better-Than-Expected Results

Fiserv’s Q4 adjusted earnings per share (EPS) came in one cent better than analysts’ estimate at $1.57. The figure grew 21% compared to the prior-year quarter.

Similarly, Q4 revenue of $4.26 billion also surpassed the analyst estimates of $4.03 billion and jumped 11% compared to the year-ago period. Revenue growth was attributed to an 18% increase in the Acceptance segment, a 4% growth in the Fintech segment, and a 9% jump in the Payments segment.

For the full year fiscal 2021, adjusted EPS grew 26% to $5.58 and revenue grew 9% to $16.23 billion.

In Q4, Fiserv repurchased $1 billion worth of common stock, and in FY21 the company repurchased $2.57 billion worth of shares.

CEO Comments

Delighted with the results, Fiserv President and CEO, Frank Bisignano, said, “For 2021, Fiserv had another successful year of delivering on our growth agenda – attaining the high end of our original organic revenue growth outlook and coming in well above our original adjusted EPS outlook, all while investing in the business to fuel further growth as we innovate to provide value for our clients.”

“We believe our agility and the strength of our assets continue to enhance our position as the operating system for commerce and money movement across our client base of banks, credit unions, fintechs, and businesses ranging from SMBs to mid-market to large enterprises,” Mr. Bisignano added.

Conservative Outlook

For the full year fiscal 2022, Fiserv expects organic revenue growth in the range of 7% to 9% based on the current economic environment and business momentum.

Moreover, FY22-adjusted EPS is projected in the range of $6.40 to $6.55, while the consensus is pegged at $6.44.

Analysts’ Take

Responding to Fiserv’s quarterly performance, Mizuho Securities analyst Dan Dolev reiterated a Buy rating on the stock with a price target of $155, which implies 55.7% upside potential.

The analyst expected mixed stock reactions despite the Q4 beat and moderate guidance. However, the analyst is cautious about the slower 2-year stacks in margin versus prior quarters, which reflect a competitive pricing landscape for the sector.

According to Dolev, “FISV is likely to benefit from significant revenue and cost synergies over the medium-term. We believe FISV’s strong execution history and momentum in its acquiring business (Clover) are competitive advantages.”

Target Price

Overall, the FISV stock has a Moderate Buy consensus rating based on 11 Buys and 5 Holds. At the time of writing, the average Fiserv price target was $131.31, which implies 31.9% upside potential to current levels.

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