10:29 AM EST, 11/04/2025 (MT Newswires) -- Fiserv ( FI ) is shifting focus from price hikes and short-term revenue drivers to more sustainable sources of income after a guidance cut and quarterly miss drove its stock to the sharpest single-day drop in almost 40 years, but analysts said a recovery might be a long time coming.

The shares of the financial technology and payments company plummeted last week after third-quarter results severely undershot consensus expectations. Chief Executive Mike Lyons, who came into the job in May, said on the company's earnings call that he worked with management during the quarter to analyze operations, and one of the main takeaways was "that Fiserv's ( FI ) growth and margin targets need to be reset."

For the full year, Fiserv ( FI ) now expects adjusted earnings of $8.50 a share to $8.60 a share, down from its prior outlook of $10.15 to $10.30. The current consensus on FactSet is for $8.72. Organic revenue growth is now expected in a range of 3.5% to 4%, down from around 10% previously.

In the third quarter, adjusted EPS of $2.04 was well below the FactSet consensus of $2.64, while adjusted revenue was up 1% from a year earlier to $4.92 billion but below the Street view of $5.35 billion.

Fiserv ( FI ) shares dropped 44% the day of the release, its worst one-day drop since 1986, according to media reports. The shares haven't recouped much ground in recent days, trading below the bottom end of its 52-week range on Tuesday.

Though he was cautious heading into the print, the magnitude of both the third-quarter revenue shortfall and cut to the organic revenue growth forecast were particularly stunning, Seaport Research Partners Senior Analyst Jeff Cantwell said in an interview with MT Newswires.

"We were looking at some of the data going into earnings, and we thought it might be valid for them to get to the prior guidance, which was 10% organic revenue growth," he said. "But when they reported, it was the severity of the miss and the reduction of the guidance to 3.5% to 4% organic revenue growth, which was a big surprise."

Fiserv ( FI ) set its original medium-term organic growth target of 9% to 12% in 2023, when it was benefiting from high interest rates and inflation in Argentina. Since then, the South American country's economy has slowed and rates have come down, which was factored into its original 2025 organic revenue growth forecast of 10% to 12%. But Lyons said Fiserv ( FI ) was also expecting its non-Argentinian business to pick up the slack, which hasn't happen.

"Our Q3 results, updated 2025 guidance and preliminary outlook for 2026 now all reflect current conditions in Argentina, the recalibration of assumptions embedded in our original guidance, all necessary investments and the deprioritization of short-term initiatives," Lyons said.

In the assessment, management found assumptions in the original guidance -- including vast business volume growth, significant productivity improvements and record sales activity -- that "would have been objectively difficult to achieve even with the right investment and strong execution," Lyons said. He also said the company is reversing some of the price changes that had been implemented. "We don't feel like they're appropriate for our business model."

Morgan Stanley analysts said in a note that a survey it conducted of small-and medium-sized businesses in April indicated that Fiserv's ( FI ) customers were "very unhappy" with price increases and that Fiserv ( FI ) and Clover, the company's point-of-sale system, had some of the lowest satisfaction rates.

Lyons and incoming Chief Financial Officer Paul Todd outlined plans to focus less on short-term revenue drivers and price increases in favor of more durable recurring revenues and stronger customer support. Todd was previously CFO at Global Payments (GPN), Fiserv ( FI ) said last week. Fiserv ( FI ) also appointed two new co-presidents.

"The FI team now seems fully committed to make the investments to recapture customer satisfaction, even at the expense of near-term earnings growth," the Morgan Stanley analysts said.

For 2026, Fiserv ( FI ) said it expects low-single-digit organic revenue growth and for adjusted EPS to be down slightly from 2025 as the company seeks to reestablish a new baseline for growth.

Bloomberg Intelligence Senior Analyst Diksha Gera said in a note that though execution risk is high, "Fiserv ( FI ) remains a global fintech-infrastructure leader with exposure to secular growth levers in digital payments, merchant acquiring and banking tech -- a solid base for recovery."

But the Morgan Stanley analysts and Seaport's Cantwell said that recovery will take some time -- at least multiple quarters and possibly years. "As such, we believe investors would be better served to focus on companies with cleaner stories/stronger fundamentals," Cantwell said in a note.

Price: 64.57, Change: -0.57, Percent Change: -0.88