We remain Neutral on
) primarily due to a volatile macroeconomic environment. The
company is very much susceptible to inflation, which would impact
costs. The continued consolidation within the banking and
financial services industry is expected to negatively impact the
company's revenue growth.
Moreover, the company's core banking products and services are
part of a highly competitive market. It faces competition from
companies such has
) to name a few. Moreover, new market entrants also pose
competitive threats. Hence, volatile macro-economic factors,
regulatory challenges and sluggish fundamentals remain the
headwinds going forward.
Nonetheless, Fiserv has strengthened its position in the
financial and payment solutions business, primarily based on its
integrated, wide-ranging suite of products. We believe that high
operating efficiency is the key reason for the company's
ever-increasing banking and financial services clientele.
We expect the company to experience strong organic revenue
growth over the long term, driven by its broad and diverse
customer base and continued technology upgrades. The company
continues to diversify its product portfolio using XML, Web
services and other industry software programming standards and
realign itself to capitalize on the most promising growth
opportunities from both geographic and product development
Moreover, various strategic partnerships have enabled Fiserv
to expand its presence in the industry. The company confirmed
winning a number of contracts from various financial institutions
during 2012. We believe new venture deals should help promote
growth of the company going forward.
Last but not the least, the company's strong balance sheet
along with a modest cash position and cash flow generation
provide viable scope for share repurchase from time to time.
These factors make the stock quite attractive in the long
Currently, Fiserv has a Zacks #3 Rank (Hold).
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