Why Fiserv Stock Is Plummeting Today
Key Points
Fiserv's third-quarter report arrived with huge sales and earnings misses.
The company also issued major downward revisions for its organic revenue growth and earnings targets.
Organic revenue growth is now expected to come in at roughly 4%, and adjusted earnings per share are projected to dip slightly.
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Fiserv (NYSE: FI) stock is getting crushed in Wednesday's trading following a very disappointing quarterly report. The fintech company's share price has fallen 43.8% in the daily session as of 2:45 p.m. ET.
Fiserv reported its third-quarter results before the market opened this morning, and underperformance in the period shocked the market. In addition to showing weak Q3 numbers, the company lowered its full-year targets and announced some shakeups for its leadership team and board of directors.
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Fiserv stock tanks on weak Q3 results
For the third quarter, Fiserv posted non-GAAP (adjusted) earnings per share of $2.04 on sales of $4.92 billion. The results came in far below the average targets from Wall Street analysts, which had called for adjusted earnings per share of $2.65 and revenue of $5.35 billion. Revenue in the period increased just 0.8% year over year, and the company's adjusted operating income fell 7% to $1.8 billion.
What's next for Fiserv?
Following its disappointing Q3 performance, Fiserv lowered its forecasts for the full-year period. The company now expects annual organic revenue growth to be between 3.5% and 4% and adjusted earnings per share to be between $8.50 and $8.60. Previously, management had guided for organic sales growth of roughly 10% and adjusted earnings per share of between $10.15 and $10.30.
So while the company's midpoint earnings target previously called for annual earnings growth of approximately 16%, shareholders are now looking at a small year-over-year decline for profits. Following the weak results, Fiserv plans to make some significant strategic shifts -- but uncertainty on that front also isn't sitting well with investors.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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