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Fiserv (FISV) Hits 52-Week High: What’s Behind the Rally?

Zacks

Shares of Fiserv, Inc. FISV scaled a new 52-week high of $81.21 on Sep 11, before closing a tad lower at $80.79.

The company’s shares have returned 23.2% on a year-to-date basis compared with the industry’s rise of 22.7%. Notably, Fiserv has witnessed a 7% rise in shares since it posted strong second-quarter 2018 results.

Let’s find out what’s driving the stock.


Diverse Portfolio to Attract More Customers
The company’s diverse product portfolio provides significant growth opportunities, courtesy of rapidly changing financial services industry as well as increasing demand for digital banking and payment services. In second-quarter 2018, Fiserv’s DNA platform comprised 11 clients, which is expected to reach nearly 30 by the end of 2018. Since its acquisition in 2013, DNA delivered largest sales figure during the quarter. DNA’s modern architecture and true real-time processing continues to remain popular. Moreover, Mobility ASP subscribers increased 24% in the quarter, to 7.5 million.

Zelle, launched in June 2017, is poised well on the back of 35 sales to financial institutions in the second quarter. The company extended ties with NCR’s Digital Insight solution to offer its turnkey Zelle solution to the latter’s digital and payments clients. Some of the largest credit unions in the world, such as Zions Bancorporation, Comerica Bank, Bank of the West and Navy Federal, have been signed as full Zelle clients. Furthermore, Zelle transactions increased more than 40% sequentially and more than 15 times on a year-over-year basis.

Additionally, the company’s BillMatrix platform launched Blue Shield of California, which offers various health payment options across multiple platforms and channels. This will add momentum to the company’s integrated biller strategy.

Active on the Partnership Front

Being active on the partnership front will help Fiserv expand product and services offerings in the market, which will strengthen its position. Recently, the company entered into a long-term agreement with NBA’s Milwaukee Bucks to promulgate latest experiences in technology and entertainment as well as announcing it as the naming partner for a new state-of-the-art arena.

In June, Fiserv tied up with Iowa-based Sioux Valley Community Credit Union (CCU) and Washington-based Coulee Dam Federal Credit Union (FCU) for enhancing their technological suite as well as delivering updated and improved services to members. In the same month, the company partnered with Dollar Bank to upgrade its digital banking and payment suite with the help of Architect solution. The company also collaborated with leading credit union, VyStar, to enhance its mobile banking platform.

Furthermore, the company entered into similar partnerships with Broadway Bank and Merchant Bank of Sri Lanka & Finance PLC (MBSL) in May, SISCOOP in April, Mastercard in March, Kawartha Credit Union in February and with Motor City Community Credit Union, First Foundation Bank as well as The Home Savings and Loan Company of Kenton in January.

Efforts to Reward Shareholders

Fiserv’s consistent efforts to reward shareholders in the form of share repurchases are impressive. During the second quarter, the company repurchased 5.4 million shares for $390 million. With regard to total share repurchases, the company crossed the $10-billion threshold in the quarter, since the program’s initiation in 2005. It repurchased shares worth $1.17 billion, $1.20 billion and $1.47 billion in 2017, 2016 and 2015, respectively. Such moves indicate the company’s commitment to create value for shareholders and underline confidence in the business. They not only instill investors’ optimism but also make positive impact on earnings.

Zacks Rank & Key Picks

Currently, Fiserv carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Business Services Sector include Broadridge Financial Solutions, Inc BR, WEX Inc WEX and Total System Services, Inc TSS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected EPS (three to five years) growth rate for Broadridge, WEX and Total System Services is 10%, 15% and 14.6%, respectively.

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