William Blair analyst Andrew Jeffrey downgraded Fiserv (FI) stock to Hold from Buy, citing what he called a “shocking” miss on third-quarter revenue and EPS estimates. It must be noted that apart from Jeffrey, two more Top analysts lowered their ratings on Fiserv stock. Shares of the fintech firm declined about 43% during Wednesday’s trading session.
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“We can no longer recommend Fiserv,” Jeffrey wrote, adding that he is uncertain about Fiserv’s competitive position in the merchant business and has limited confidence in its current forecasts due to low visibility.
Jeffrey also pointed to the sudden leadership shake-up as a red flag, noting that newly appointed CEO Mike Lyons now faces a tough road ahead in diagnosing the company’s issues.
Similarly, Wolfe Research analyst Darrin Peller downgraded Fiserv to Hold. He said the company’s lowered outlook raises concerns about deeper structural issues. While he acknowledged Fiserv has strong assets, he sees too much uncertainty ahead as the company undergoes a key transition period.
Also, Compass Point’s Dominick Gabriele lowered FI stock’s rating to Hold from Buy with a price target of $127.50.
Road Ahead for Fiserv
The earnings miss and guidance cut have raised serious questions about Fiserv’s road ahead. The company’s core payments and merchant business remain under pressure from strong competition and slowing consumer spending, particularly among lower-income households.
The CEO acknowledged the challenges, stating, “Our current performance is not where we want it to be nor where our stakeholders expect it to be.”
To address the challenges, Fiserv has launched a new strategic framework called “One Fiserv”, aimed at streamlining operations. The plan focuses on five key areas: increasing average revenue per client, expanding its Clover platform, developing innovative solutions in finance and commerce, enhancing efficiency through AI, and maintaining disciplined long-term capital allocation.
Is Fiserv a Good Stock to Buy?
Turning to Wall Street, FI stock has a Moderate Buy consensus rating based on 12 Buys and six Holds assigned in the last three months. At $156.53, the average Fiserv stock price target implies a 119.44% upside potential.
