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Fiserv Hits a New 52-Week High on Encouraging Q2 Results

Zacks Equity Research

Fiserv, Inc. FISV hit a new 52-week high of $90.54 in yesterday’s trading session and eventually closed at $89.80.

Fiserv has been gaining momentum since it reported second-quarter 2015 results on Jul 29. Since then, its shares have gained about 5.6% compared with the S&P 500’s return of a mere 0.21%. In the past one-year period, the company has returned over 39% compared with the S&P 500’s return of 4.4% in the same period.

Shares have witnessed an upside despite the company missing revenue expectations. The company’s financial and payment solutions business is expected to remain strong driven by a broad customer base and important contract wins from the likes of U.S. Bank and Synchrony Bank. Additionally, in the reported quarter, Fiserv added over 100 new retail and business clients to its Mobiliti ASP solutions, which ended the quarter with about 3.5 million retail subscribers.

Fiserv’s key growth drivers include a healthy product portfolio, significant acquisition synergies and steady flow of new customers. Additionally, the company holds a prime position in the financial and payments solutions business, which is an important factor driving its growth.

Fiserv has been constantly expanding its products range. Its new offerings like Popmoney, Mobiliti, DNA have already been well accepted by the industry. Yesterday, the company’s AML Risk Manager solution received the vendor award in the anti-money laundering (AML) solutions category from Aite Group as part of their ‘2015 Global AML Vendor Evaluation’ program.

Five estimates for 2015 and six estimates for 2016 were revised higher over the past 30 days. This pushed up the Zacks Consensus Estimate for 2015 by 0.3% to $3.81 per share while that for 2016 increased 0.5% to $4.29 per share.

Nonetheless, tightening regulations in the banking and financial services industry is expected to remain a concern in 2015. We also believe that intensifying competition from the likes of Global Payments GPN, Jack Henry & Associates Inc. JKHY and MasterCard Inc. MA can be a concern for this Zacks Rank #3 (Hold) company.

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