Fiserv Solutions Selected By Four Credit Unions - Analyst Blog

Fiserv Inc FISV recently signed contracts with four leading credit unions namely, Abri, MIDFLORIDA, Southeast Federal Credit Union and Wauna. The credit unions chose four different account processing solutions from Fiserv to upgrade their enterprise infrastructure.

Fiserv's long-time customer Abri selected XP2 account processing solution. MIDFLORIDA chose DNA, flagship product of Open Solutions, which Fiserv acquired in early 2013. Since the completion of the acquisition in Jan 2013, Fiserv has won 40 contracts for the DNA platform.

Southeast Federal Credit Union and Wauna Credit Union selected Fiserv's Portico and CUnify solutions, respectively. These wins reflect Fiserv's growing popularity among financial institutions, which bodes well for top-line growth.

Fiserv's broad customer base and various contract wins are the key growth catalysts. This is evident from the fact that Payments and Industry Products revenues increased 8.7% year over year to $590.0 million in the first quarter.

Fiserv signed 82 electronic bill payment clients and 30 debit processing clients during the first quarter. The company also signed 51 new Mobiliti customers and 63 new Popmoney clients.

Moreover, accretive acquisitions have been a key growth driver for Fiserv over the years. Acquisitions have helped it to diversify product portfolio and upgrade technology. The company's advance product portfolio is likely to further enhance its revenue streams.

The new partnership with Visa V will allow Fiserv to offer debit EMV solutions for the Accel debit network. We believe that EMV-based card solutions have significant growth opportunities in the U.S. and this partnership will boost Fiserv's EMV offering in the long run.

Higher recurring revenues, operational efficiencies and strong internal growth are expected to result in solid earnings and free cash flow growth. However, the back-end loaded guidance is expected to remain a concern in 2014. We also believe that intensifying competition from the likes of Global Payments GPN and MasterCard Inc. MA remains a major headwind.    

Currently, Fiserv has a Zacks Rank #3 (Hold).