Fiserv set for major earnings growth, says fund manager

In November 2024, Fiserv, a Milwaukee-based payments company, saw its stock perform exceptionally well, rising nearly 12% within the month and a remarkable 67% over the entire year. This performance has drawn attention from fund managers, particularly Patrick Burton, a senior managing director at Winslow Capital Management, who has been actively purchasing shares in recent months. Burton believes that Fiserv's revenue can grow close to 15% over the next three years, attributing part of this optimism to the success of the company's acquisition of First Data in 2019 for $22 billion. He notes that this consolidation allows Fiserv more resources for stock buybacks, which could further enhance earnings per share growth, projecting an increase of 18%-20% in the coming years. Many analysts share a bullish sentiment regarding Fiserv's future performance. According to LSEG data, 32 of the 38 analysts monitoring the company have a rating of either buy or strong buy. Citigroup has also included Fiserv on its prestigious "Thematic 30" recommendation list, indicating strong institutional confidence in its stock. Additionally, Sanders Capital, led by former AllianceBernstein CEO Lewis Sanders, has recently revealed its significant investment stake worth over $700 million in Fiserv. However, not all views are optimistic, as some market observers express skepticism about the sustainability of Fiserv's growth. For instance, an analyst with a neutral rating pointed out the potential for mean reversion in the broader bank technology market, suggesting that Fiserv's extraordinary performance could eventually stabilize or decline. Nevertheless, the majority of analysts acknowledge the company's strong market position and potential for further growth, supported by solid earnings results. In October 2024, Fiserv reported earnings per share of $2.30, exceeding analysts' expectations by 4 cents, although its revenue of $4.88 billion fell slightly short of the anticipated $4.90 billion. Going forward, analysts anticipate that Fiserv will continue leveraging its capabilities and recent acquisitions to drive further growth. The company's various units, including Clover, which specializes in point-of-sale systems for small and mid-sized businesses, and its association with the Zelle payment platform, play critical roles in maintaining its competitive edge. Ultimately, the anticipation remains high for Fiserv's stock performance, aligning with the positive sentiment exhibited by the market and increasing institutional investments.