Fiserv Shares Up Despite Analysts’ Worries

Fiserv (FISV) is doing well today, but the AP notes that some analysts are worried:

Analysts said the company, which caters to the financial services and health benefits industry, benefited from a surge in flood claims, and a larger-than-expected stock buyback program.
Although Jefferies & Co. analyst Craig Peckham said the company had a “great” quarter, he remains concerned about underlying gross margin trends in the company’s core financial services business.
“With Fiserv’s portfolio consisting largely of relatively mature businesses, we remain on the sidelines for now, believing that mid-single digit internal growth will persist for the foreseeable future and near-term margin declines will restrict multiple expansion from current levels,” Peckham wrote in a note.
Similarly, Merrill Lynch analyst Gregory Smith, who holds a “Neutral” rating on the company, said Fiserv’s pretty upside could be deceiving.
“Fiserv reported first-quarter upside to both revenue and earnings driven by strong flood processing volumes following last year’s hurricanes. However, this does not translate into upside to the company’s full-year revenue and earnings per share guidance, which had assumed this level of flood revenue,” Smith wrote in a note.
“While first-quarter upside versus Street expectations may push shares higher today, excitement should be tempered by the fact that guidance for the full year remains intact and that within the context of management guidance, higher flood revenues actually indicate a lower level for core operations,” he added.
For the full year, the company said it expected to earn $2.46 to $2.53 per share, while analysts expect the company to earn $2.49 per share.

AFLAC (AFL) is aslo higher today, and SEI Investments (SEIC) is at a new high. Fair Isaac (FIC) reports after the close.

Posted by on April 26th, 2006 at 11:29 am


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