Raymond James Downgrades First Data After 16% Rally

Shares of First Data Corp FDC have surged on news of the company being acquired by financial services technology company Fiserv, Inc FISV.

With First Data shares appreciating 16 percent since the deal announcement, it’s time for shareholders to lock in profits, according to Raymond James.

The Analyst

Analyst John Davis downgraded First Data from Outperform to Market Perform and removed the $25 price target.

The Thesis

Following the recent runup, First Data’s shares are trading close to the prior price target and any further gains would require proof that current pro forma estimates are potentially conservative, Davis said in the Tuesday downgrade note.  

The merger deal is unlikely to close within the next five months, and the company’s shares could remain rangebound until then, the analyst said. 

First Data is scheduled to report its fourth-quarter results Feb. 7. This could be a non-event, since the company has already pre-announced quarterly results and issued its initial 2019 guidance, Davis said. The risk-reward is “skewed slightly to the downside into earnings,” he said. 

The Fiserv merger could potentially create substantial shareholder value, but this could take time, and the upside in the near-to-medium-term is limited, the analyst said.

Price Action

First Data shares were up 0.28 percent at $25.10 at the time of publication Tuesday. 

Related Links:

Benzinga's Top Upgrades, Downgrades For February 5, 2019

What To Know About Fiserv's Acquisition Of First Data