Investing.com -- Goldman Sachs upgraded Fiserv Inc (NYSE:FI) to "Buy," citing product-driven revenue acceleration and an attractive valuation, while also upgrading Jack Henry&Associates (NASDAQ:JKHY) to "Neutral" as fintech stocks struggle amid a weaker macro backdrop.
The firm’s fintech coverage has declined 17% on average since late January, with consumer spending outlooks deteriorating due to rising inflation expectations, delayed rate cuts, and wealth effects impacting discretionary spending.
Goldman now favors a "barbell approach," balancing high-beta names with more defensive plays.
Goldman sees Fiserv benefiting from multiple growth drivers, including international expansion and new offerings in its Clover platform, the onboarding of major issuer processing clients, and the rollout of its small business banking suite, CashFlow Central.
Shares trade at 18x 2026 EPS, with a 5% free cash flow yield and mid-teens EPS growth. The firm set a $260 price target, reflecting an 18% upside.
Jack Henry&Associates was upgraded to "Neutral" on expectations of accelerating top-line growth, improving free cash flow conversion, and potential margin expansion from its product rationalization strategy.
While Goldman sees an improved outlook, it maintains a cautious stance due to the stock’s valuation and historical limits on share repurchases.
Goldman ahead of its Q1 earnings expects mixed results due to seasonal disruptions, economic uncertainty, and declining consumer confidence.
The firm is positive on Fiserv, Affirm, and Remitly but more cautious on Global Payments (NYSE:GPN), Shift4, and Western Union (NYSE:WU).
Despite a choppy consumer spending environment, large-cap players suggest underlying stability, though sluggish restaurant spending may weigh on SMB-focused processors such as Toast (NYSE:TOST), Global Payments, Shift4.
However, the weakening U.S. dollar has eased FX headwinds, providing a potential tailwind in the back half of the year.
