Fiserv Enhances Payments Offering

Zacks

Fiserv, Inc. (FISV) recently announced that the company plans to combine the Popmoney and ZashPay person-to-person (P2P) payment networks. The company intends to market the combined service as Popmoney.

As of a result of this combination, the network will connect 1,400 financial institutions thereby reaching 35 million consumers through their existing online and mobile banking relationships.

In 2010, Fiserv introduced ZashPay, a person-to-person payments service that enables the secure, electronic movement of money to and from U.S.-based bank accounts, typically within one to three business days.

In September 2011, Fiserv acquired CashEdge which provides consumer and business payments solutions such as account-to-account transfer, account opening and funding, data aggregation, small business invoicing and payments and person-to-person payments. The payment solution from CashEdge – Popmoney is a person-to-person payments solution. 

Popmoney enables consumers to make billion person-to-person payments electronically via their existing bank accounts.

Last month, Fiserv reported an adjusted income from continuing operations (excluding one-time items) of $181 million or $1.27 per share in the fourth quarter of 2011 compared to a net income of $166 million or $1.16 per share in the third quarter of 2011 and a net income of $159 million or $1.06 per share in the year-ago quarter. Earnings were in line with the Zacks Consensus Estimate.

Adjusted revenues (excluding output solutions postage reimbursements) came to $1.08 billion, up 5.6% year over year and 8% sequentially. Strong segment and license sales along with continued faith of customers are primary drivers for the revenue increase. This, however, missed the Zacks Consensus Estimate of $1.135 billion.

Fiserv is quite optimistic about its performance in 2012. Management currently projects an annual adjusted revenue growth rate of 4% - 6% with adjusted EPS expectations of $5.04 - $5.20, representing a yearly growth of 10% - 14%.

We have a Neutral recommendation on Fiserv. In the short-run, we have a Zacks #2 Rank, which translates into a Buy rating.

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