Fiserv to Acquire Finxact for $650 Million; Shares Rise 2%

Payments and financial services technology provider Fiserv, Inc.(NASDAQ: FISV) recently revealed that it has entered into an agreement to acquire cloud-native banking solutions developer Finxact for $650 million. The deal is likely to close by the end of this year.

Following the news, shares of the company rose more than 2% to close at $107 in Monday’s extended trading session.

Finxact is a provider of modern, real-time and extensible banking solution that allows financial institutions enhanced access to their data. Finxact helps organizations of all sizes launch new products and strengthen their digital capabilities.

The acquisition of Finxact is likely to boost Fiserv’s digital banking strategy, expanding the company’s account processing, digital, and payments solutions. Further, Finxact will enable Fiserv to provide clients modern, flexible and highly personalized digital banking experiences.

Management Commentary

The CEO of Fiserv, Frank Bisignano, said, “This transaction complements our Fiserv account processing solutions and expands our opportunities to serve clients by bringing together Finxact’s highly flexible and scalable API-first capabilities with the comprehensive digital financial solutions portfolio and expertise of Fiserv. Through this combination, Fiserv will create a streamlined path for clients to offer digital solutions to their customers. Finxact also enhances our ability to support a growing number of financial institution and business clients.”

Stock Rating

Recently, Robert W. Baird analyst David Koning reiterated a Buy rating on the stock with a price target of $144, which implies 36% upside potential from current levels.

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 11 Buys and 5 Holds. The average Fiserv price target of $131.31 implies that the stock has 24% upside potential from current levels. Shares have declined 6.6% over the past year.

Negative Sentiment

TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on FISV, as 3.8% of portfolios tracked by TipRanks have decreased their exposure to FISV stock over the past 30 days.

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