Fiserv stock forecast: is it a buy after the $116 billion wipeout?

Fiserv stock price has suffered a rude wakeup call after erasing over $116 billion in value in the past few months. Its stock plunged from a high of $237 earlier this year to $70 today. It has formed a death cross pattern, meaning that the sell-off could continue.

Fiserv stock price technical analysis

The weekly chart shows that the FI stock has been in a strong downward trajectory in the past few months, moving from a high of $237 to a low of $70.

It has crashed below several important support levels, including the psychological level at $100 and $86, its lowest level in July 2022.

This crash has erased gains it made since January 2019 l, the last time it was in these levels.

The chart shows that the stock has now formed a death cross pattern as the 50-week and 200-week Exponential Moving Averages (EMA) crossed each other. This pattern leads to more downside over time.

At the same time, the Relative Strength Index (RSI) has moved to the oversold level of 15, while the two lines of the Stochastic Oscillator have moved to 9.

The stock has also plunged below the Ichimoku cloud indicator and the supertrend.

Therefore, the most likely scenario is where the Fiserv stock price continues falling in the near term as sellers target the key support at $65 as fear continues.

The alternative scenario is where the stock rebounds and retests the resistance level at $88.52. Such a rebound will be a dead-cat bounce, which is a temporary rebound that often leads to more downside over time.

Why the FI stock price crashed 

The Fiserv stock price crashed after the management published financial results that missed analysts’ estimates.

Fiserv, which helps companies to receive payments, and counts firms like Accenture, Hermès, and Globant as clients, published results that were weaker than expected.

Its quarterly rose by 1% to $4.92 billion and 5% to $14.9 billion. Its organic revenue rose by 1% helped by its merchant solutions and offset by a 3% decline in its financial solutions segment.

Most notably, its profitability declined, with the earnings-per-share falling by 11% to $2.04. Operating margin fell to 37.2% from the previous 37.7%, while its free cash flow plunged to $2 billion. In a statement, the CEO said:

 “Our current performance is not where we want it to be nor where our stakeholders expect it to be. With the actions being announced today, Fiserv will be better positioned to drive sustainable, high-quality growth and reach our full potential.”

The stock also crashed as the management’s plan to salvage the company disappointed. It includes operating with a client-first mindset to win new enterprise customers, boost its focus on small businesses, leveraging AI, and improving its capital allocation. These efforts, while good, offered no tangible approach to correct its downward trajectory.

On the positive side, Fiserv is still a solid company that may execute a good turnaround, which will boost its stock performance. This, however, will likely take time and require a lot of patience from investors.

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