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Fiserv stock heads for best day in nearly 3 years as analysts focus on Clover growth

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Fiserv Inc. shares are headed for their best day in nearly three years Tuesday, after the merchant-acquiring company topped revenue expectations for its latest quarter, while delivering an upbeat profit outlook and showing progress on margins.

The financial technology company generated adjusted earnings per share of $1.91 in the latest quarter on GAAP revenue of $4.63 billion, up from adjusted EPS of 50 cents on revenue of $4.26 billion a year before. Analysts tracked by FactSet were expecting $1.91 in adjusted EPS and $4.56 billion in GAAP revenue.

Chief Executive Frank Bisignano noted on the earnings call that the company saw 360 basis points of operating-margin expansion in the latest quarter.

2023 earnings outlook is for $7.25 a share to $7.40 a share on an adjusted basis, whereas the FactSet consensus was for $7.29 a share.

Shares were up about 6.5% in midday trading Tuesday, putting the stock on pace to log its largest single-day percentage gain since April 6, 2020, when it rose 11.2%. Fiserv’s stock was up as much as 7.2% earlier Tuesday.

The stock was also flirting with a historic post-earnings gain. A rally of between 6.16% and 11.93% for the day would mark Fiserv’s best post-earnings stock performance since the company reported earnings for its fourth quarter of 2000 in early 2021, according to Dow Jones Market Data.

Analysts were quick with their praise in the wake of Fiserv’s report.

The latest earnings and outlook “will help propel FISV back into the ‘sustainable, defensive, share-taking’ lane in terms of investor sentiment,” wrote Barclays analyst Ramsey El-Assal. “Strategic biz investments are paying off nicely as the company projects FY guidance in-line with medium-term targets—despite the potential drag from a modest recession.”

El-Assal keyed in the company’s margin outperformance, writing that it reflects “the final ramp-down of FDC [First Data] integration expenses, productivity benefits, tightened discretionary spending, and the divestiture of the Korea business + two small low-margin non-strategic units.”

Additionally, he called out 9% growth in active merchant count and 12% growth in revenue per user for Fiserv’s Clover business during fiscal 2022. Clover makes point-of-sale technology and business software, and is a rival to Block Inc.’s

El-Assal reiterated an overweight rating and $125 target price in a note titled, “A Rare Way to Play both Defense and Offense.”

Baird analyst David Koning also talked up Fiserv’s positioning in the universe of payment stocks.

“The stock has been the fastest-grower of our large caps in 2019-2023E with the least volatile results…we like that,” he wrote in a note to clients.

Mizuho’s Dan Dolev cheered Fiserv’s “solid yield expansion in its all-important merchant acquiring vertical,” which he thought was “likely helped by Clover yield expansion.”


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