J.P. Morgan Lowers Fiserv Estimates Following Mixed 1Q Results (FISV)

According to J.P. Morgan, Fiserv FISV reported mixed first quarter results last night, leading to lowering estimates. J.P. Morgan details, “Last night, Fiserv reported mixed 1Q results with solidly inline revenue growth but EPS of $1.02 below our/Street expectations of $1.04 on light margins. Although 3% revenue growth was encouraging in light of headwinds, margin contraction of 40bps will likely be a focus for the bears.” J.P. Morgan has adjusted estimates, saying, “We are now forecasting 2.8% internal revenue growth (3.2% overall) for FY11 (2.0% in Financial; 4.6% in Payments). Our op. margin estimate of 29.7% (previously 29.9%) assumes 34bps of expansion, reflecting a weak 1H followed by 2H margin expansion. Investment spend/return timing remains a key watch item. We are adjusting our FY11 EPS to $4.48 (down from $4.51; guidance of $4.42-$4.54) for the 1Q shortfall and higher interest expense.” J.P. Morgan maintains its Neutral rating and $66 price target. Fiserv closed yesterday at $64.39.