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Fiserv Inc (NASDAQ:FISV) was downgraded to Equal Weight by Wells Fargo analyst Jeff Cantwell on Thursday.
In a note in which the analyst covered various stocks, Cantwell said they were downgrading Fiserv despite expecting second-quarter results to be solid as “data remains largely positive, and CEO/CFO commentary has been constructive.”
“We expect June exit rates will be closely watched by investors,” wrote Cantwell. “‘Higher for longer’ inflation means lower valuations for longer. With that in mind, we’re getting more selective—even though we expect this to be controversial.”
The analyst also lowered the price target on Fiserv to $97 from $123 and added that they “like GPN over FIS/FISV.”
Referencing Fiserv and Fidelity National, Cantwell explained, “these companies’ P/E multiples have been shifting over time,” and with “GPN currently valued at 10.4x NTM earnings, we see its 1.3x P/E discount vs. FIS and 2.5x P/E discount versus FISV as overdone.”
“On our revised forecasts, we see GPN growing revenue and earnings faster than FIS and FISV through ’23. Weakening macro will impact all three companies, but we see GPN’s revenue growing by 8.2% in ’23 vs. FISV growing revenue by 6.1% and FIS by 6.5%. For ’23 earnings, we see GPN growing by 13.8%, FISV by 11.2%, and FIS by 10.8%.”
