Stock Market Latest

Business: Fiserv provides payment and financial services technology worldwide. The company operates through Acceptance, Fintech, and Payments segments. The Acceptance segment provides point-of-sale merchant acquiring and digital commerce services; mobile payment services; security and fraud protection products; Carat, an omnichannel commerce solution; and Clover POS, a cloud-based point-of-sale solution. This segment distributes through various channels, including direct sales teams, strategic partnerships with agent sales forces, independent software vendors, financial institutions, and other strategic partners. The Fintech segment offers customer deposit and loan accounts, as well as manages an institution’s general ledger and central information files. This segment also provides digital banking, financial and risk management, cash management, professional services and consulting, item processing and source capture, and other products and services. The Payments segment offers card transactions, such as debit, credit, and prepaid card processing and services; security and fraud protection products; card production; print services; and various network services, as well as non-card digital payment software and services, including bill payment, account-to-account transfers, person-to-person payments, and electronic billing products. It serves businesses, banks, credit unions, other financial institutions, merchants, and corporate clients.

Stock Market Value: $78.1B ($117.94 per share)

Percentage Ownership:  1.60%

Average Cost: n/a

Activist Commentary: ValueAct has been a premiere governance-oriented investor for 20 years and since 2017, has been helmed by Mason Morfit as chief investment officer. ValueAct has broadened the activist playbook a little under Morfit, but it continues to be a premier governance-oriented investor with its partners on the boards of approximately half of the firm’s core portfolio positions.

ValueAct Capital has taken a $1.2 billion (1.60%) position in Fiserv Inc. (FISV).

This investment in Fiserv is right in ValueAct’s sweet spot – a technology company with good management, products and relationships that are somewhat misunderstood by the market. Some of ValueAct’s most profitable investments were in other misunderstood technology businesses like Microsoft, Seagate and Adobe. For example, both Microsoft and Seagate were viewed as PC companies when they were really Cloud companies. The market now views Fiserv as an old legacy technology company, when it is really a new world company.

Even as a legacy technology business, Fiserv is a good company, growing at approximately 8% per year. But Fiserv is transforming itself well before being disrupted by smaller competitors, and it has the relationships to scale their technology with their deeply integrated clients. A perfect example of this is Clover, the company’s smart POS terminal. Clover came out a few years after Square, but Clover’s business is already bigger with the amount of payments it is processing and growing faster than Square. Clover could be valued today at $30 billion to $45 billion including debt on a standalone basis and could be worth $185 billion by 2024.

But Clover is just one opportunity to transform. The key here is that management is embracing this transformation strategy and could find other organic and strategic opportunities to further it. If the company fully embraces its evolution, it should be able to achieve an annual growth rate of at least 15%. This transformation can increase the company’s lifetime value of its products by 60%.

In order to get there, there are three main areas for the company to focus on. First, investing to drive this growth rate up. Second, growing through acquiring and integrating a few other businesses that are like Clover. And third, simplifying its strategy and how it communicates with the market. The market needs to better understand the company and its opportunities.

Right now, FISV trades at a discount to the average S&P 500 company, even though its growth rate is higher than the average S&P 500 company, without giving credit for additional growth from Clover. ValueAct can be very helpful in assisting management in achieving this transformation, just like they did at Microsoft, Adobe and Seagate. As history has shown, they will be at least an engaged and supportive shareholder and if need be, will provide value as a director to create value for shareholders. They will certainly continue to engage with the company on a supportive basis as they get to know each other better and if they do end up taking a board seat it will likely be on an amicable basis to support management. 

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.

As the year progresses, the vast majority of companies have already posted their latest quarterly results.

The economic recovery ramped up throughout the first half of 2021, and many firms saw massive revenues. Now, investors’ attention has turned from summer and travel trends to what the fall season may have in store.

With TipRanks’ unique tools, investors can see which companies Wall Street’s top analysts think are well-positioned to capture these shifting trends. These analysts are some of the highest ranked on TipRanks, based on their success rates and average returns per rating.

Here are five stocks that Wall Street’s best-performing analysts think still have major upside potential after earnings.

Companies have been preparing their workforces for the grand return to the office, some hybrid, some full-time. However, due to the high rate of infection of COVID-19 in the U.S., several high-profile firms such as Apple have just announced delays in their return dates. This bodes well for cloud computing architecture services, such as Microsoft‘s Azure and Office 365 platforms.

Upon review of Microsoft’s performance, Daniel Ives of Wedbush Securities said that he sees the work-from-home trend persisting. After showing strong momentum throughout 2020 and the first half of 2021, Microsoft continues to close large deals for both enterprise- and consumer-level packages of its cloud-based services. These deals are expected to provide revenue for Microsoft well into 2022.

Ives maintained his buy rating on the stock, and bullishly raised his price target from $325 to $350.

The five-star analyst added that in the “cloud arms race,” Microsoft is poised to capture more market share than Amazon Web Services. Microsoft recently hiked its prices for Office 365, which Ives anticipates could generate more than $5 billion in 2022.

Regarding a long-term cloud computing stock pick, Ives stated, “Microsoft remains our favorite large cap cloud play, and we believe the stock will move higher into year-end as the Street further appreciates the cloud transformation story.”

Out of more than 7,000 analysts on TipRanks, Ives is ranked as #36. The analyst has a 73% success rate on his stock picks, translating to an average return of 34% per rating.

U.S. consumer discretionary spending trends took off over the last year and half, particularly when it comes to digital shopping. Target has been successful in capturing these movements, and is well-positioned to continue doing so.

Robert Drbul of Guggenheim reported bullishly on the stock, stating that he is “encouraged by the ongoing strength of Target’s business, its profitability and cash flow generation.” Target recently reported second-quarter earnings results, beating Wall Street consensus estimates by 7% in earnings per share, as well as in several other key sectors and metrics.

Drbul reiterated a buy rating for Target, and raised his price target from $250 to $295.

The five-star analyst mentioned that Target has continued to see confidence-instilling growth, in both in-store and digital sales. The general merchandise retailer marked clear success in its fulfillment-from-store operations, moving 95% of its total sales for the quarter and capturing surging online demand. Same day shipping and pickup services expanded another 55% over the same time period, after massive growth of 270% in 2020.

The large stores continue to remain relevant through high-profile brand partnerships. Additionally, Drbul noted that “all five core merchandise categories delivered positive comparable sales, on top of last year’s historic sales performance.”

While increases in freight and shipping costs put a slight dent in Target’s margins, the company has approved up to $15 billion in new share repurchases, and has already completed repurchasing $1.5 billion in stock from the previously approved program.

On TipRanks, Drbul is rated as #319 out of over 7,000 analysts. His average return per rating stands at 12.3%, and he currently maintains a success rate of 67%.

Closed semiconductor factories, mixed with a heightened demand for smartphones, computers, and automobiles that was brought on by the Covid-19 economic shifts, created the perfect storm. An ongoing semiconductor shortage has been pressuring technology and automotive manufacturers for much of the second quarter. Although several analysts believed it to be easing, the situation is not so simple. The increased demand is, however, good for Applied Materials, which is expected to see revenues continue to grow through 2022.

Bullish Quinn Bolton of Needham & Co. believes the stock “will outperform peers in 2022 due to a structurally favorable WFE [wafer fab equipment] mix next year.”

Bolton reiterated a buy rating on the stock and declared a price target of $153.

Just last Thursday, Applied Materials reported strong second-quarter earnings results, beating Wall Street consensus estimates on earnings per share and gross margin, as well as raising guidance for the third quarter

The expansion in demand for semiconductors has been equalizing, as the firm commits to ramping up supply. Despite this, dynamic random-access memory chips remain undersupplied, although their “spot prices started to fall a couple of weeks ago,” wrote Bolton.

Applied Materials is said by Bolton to have an order backlog worth more than $10 billion. This fact alone underlines the company’s fundamental health and its potential for steady revenues, moving forward.

The five-star analyst is rated by TipRanks as #5 out of over 7,000 total analysts on the site. His stock rating’s success rate holds at 74% correct, and he averages a return of 45.1% per rating.

Identifying trends is one of the main requirements of Wall Street’s top analysts. Indeed, trends are in favor of Petco. The Covid-19 pandemic kept people at home, and many then acquired pets, which require care. As this pattern sticks, Petco stands to benefit.

Peter Benedict of Robert W. Baird wrote that Petco “operates a unique, fully integrated pet care ecosystem within the ~100B U.S. pet market.” Its strong second-quarter earnings, roadmap toward offering health services, and lowered debt burdens help categorize it as an attractive stock.

Benedict maintained a buy rating on Petco and assigned a price target of $30.

Calling pets an “annuity,” the analyst noted that several services are necessary to maintain one, so customers are frequently recurring. Petco already captures this market with its diversified offerings, and has been expanding its in-house veterinary services as well. This opportunity is seen by Benedict as a long-term initiative which will expand market share.

The company printed quality second-quarter earnings results, beating expectations and raising guidance. Benedict added that as economies reopened, “in-store shopping drove robust pet care center sales,” and premium services like grooming, training, and medical are in high demand.

When taking into account the company’s additional initiatives in “merchandising, services, digital and data analytics capabilities,” Benedict said that Petco’s stock stands at an attractive valuation.

Benedict is rated by TipRanks as #25 of more than 7,000 experts, and 83% of his ratings have been successful. He averages a return of 24.9% per rating.

Another massive semiconductor firm has been experiencing high sustained demand for its chips. Nvidia was successful in closing an upbeat Q2, and is expected to continue raking in revenue as gaming and automotive manufacturers demand its products. While the firm struggles to close an acquisition deal, Rajvindra Gill of Needham & Co. nevertheless published his bullish hypothesis on its future outlook.

Gill reiterated a Buy rating on the stock, and raised his price target from $200 to $245 per share.

Nvidia beat second quarter Wall Street consensus estimates on earnings per share and gross margin. With its margins widening, Gill expects the company to have “significant operating leverage.”

On the downside, the five-star analyst does not expect Nvidia’s acquisition of technology firm Arm Ltd. to close any time soon. Obstacles are mounting and negotiations are dragging on, so he estimates a 20% chance of success for this opportunity.

Despite this, demand for data centers is growing significantly, as the trend of enterprise-sized cloud computing takes hold. Furthermore, Gill identifies an opportunity for growth, as an internet service provider can run a full data center based on Nvidia’s triton programming language. Data center build-outs remain Nvidia’s largest driver of growth.

Additionally, the analyst does not see the volatility in cryptocurrency mining regulations as a concern. He writes that while Nvidia’s products are used by some miners, the exposure the company has to this revenue stream is not significant.

To Gill, Nvidia remains a buy partly due to its attractive valuation. He is encouraged by its “superior balance sheet,” calling it “the best one in the industry.”

On TipRanks, Gill has a ranking of #161 among more than 7,000 Wall Street analysts. His ratings return an average of 18.2%, and he is successful 68% of the time.

Beijing is eyeing new rules that would restrict domestic internet companies from going public in the U.S., The Wall Street Journal reported Friday.

Chinese regulators are specifically targeting tech firms with user-related data, and companies that are less data-heavy such as pharmaceuticals could be insulated from the IPO ban, the Journal reported, citing people familiar with the matter.

Shares of Alibaba fell nearly 3% in premarket trading Friday after losing 15% this month alone. The Invesco Golden Dragon China ETF (PGJ), which tracks U.S.-listed Chinese shares consisting of ADRs of companies that are headquartered and incorporated in mainland China, has lost 26% this quarter amid the increased regulatory pressure.

The new rules haven’t been finalized and Beijing plans to implement them around the fourth quarter, the Journal reported.

Earlier this week, China’s cybersecurity regulator laid out two aspects of regulation that companies wanting to go public must comply with — one is the national laws and regulations, and the other is ensuring the security of the national network, “critical information infrastructure” and personal data.

These industries with critical data include public communication and information services, energy, transportation, waterworks, finance and public services, the regulators said previously.

Beijing is already cracking down on industries from tech to education and gaming, while tightening restrictions on cross-border data flows and security. The government has gone after some of China’s most powerful companies, including Didi, Alibaba and Tencent.

Meanwhile, the Securities and Exchange Commission has stepped up its oversight of Chinese companies seeking U.S. IPOs. The agency said it will require additional disclosures about the company structure and any risk of future actions from the Chinese government.

The so-called variable interest entities are a structure used by major Chinese companies from Alibaba to JD.com to go public in the U.S. while skirting oversight from Beijing as the country doesn’t allow direct foreign ownership in most cases.

These variable interest entities allow China-based operating companies to establish offshore shell companies in another jurisdiction and issue stocks to public shareholders.

— Click here to read the original Wall Street Journal story.

Shares of Support.com extended their massive GameStop-style rally as Reddit-obsessed retail investors zoned in on the heavily shorted software name.

The stock of the provider of technical support surged 38.2% on Monday to $36.39 apiece, posting its eighth straight day of gains. Shares have skyrocketed 347% during the eight-day winning streak as Reddit traders flocked into the little-known small-cap stock.

Nearly 60% of Support.com’s float shares are currently sold short, according to S3 Partners. That’s an extremely high level of short interest, as an average U.S. stock typically has about 5% shares sold short.

The meteoric rise is reminiscent of the epic GameStop short squeeze in January, when coordinated trading on social media platform WallStreetBets resulted in monstrous moves in the stock and inflicted huge losses for short sellers.

When a stock jumps sharply, it forces short sellers to buy back shares in order to limit their losses. The short covering tends to fuel the stock’s rally further.

SPRT ticker mentions have increased 66% over the past week on Reddit’s WallStreetBets, according to alternative research provider Quiver Quantitative.

In March, Support.com said it agreed to merge with Greenidge Generation Holdings. The company said earlier this month that it scheduled a special stockholders meeting for Sept. 10 to approve the proposed merger.

Vinco Ventures — which trades under the ticker BBIG — is another popular target in the chatroom, Quiver Quantitative data showed. The stock jumped about 33% on Monday after jumping 120% last week.

Drastic moves in meme stocks tend to occur when overall trading is muted on Wall Street. Investors are mostly awaiting a key jobs report on Friday before the Labor Day weekend in a week that will likely see below-average volume.

PayPal is exploring a possible stock-trading platform.

After rolling out the ability to trade cryptocurrencies last year, the payments giant has been exploring ways to let users trade individual stocks, according to two sources familiar with the plans.

The San Jose, California-based company recently hired brokerage industry veteran Rich Hagen as part of the move, according to one of the sources. After leaving Ally Invest, Hagen is now the CEO of a previously unreported division of PayPal called Invest at PayPal, according to his LinkedIn page. Hagen was the co-founder of online brokerage TradeKing, which was bought by Ally Invest.

His current job description outlines PayPal’s efforts to “explore opportunities” in the consumer investment business. When reached for comment, PayPal pointed CNBC to CEO Dan Schulman’s comments at the company’s investor day in February, when he spoke about the long-term vision for the company and how it may include many more financial services, including “investment capabilities.”

PayPal’s move comes amid a retail trading renaissance. More than 10 million new individual investors have entered the market in the first half of this year, roughly matching last year’s record level, according to estimates from JMP Securities. A combination of stay-at-home orders during the pandemic, government stimulus checks and viral events like the rise of GameStop in January have spurred on new interest in the stock market.

Trading has become a booming business for the companies that offer it. PayPal rival Square offers stock and cryptocurrency trading through the Square Cash App, and its CFO has said the app drives engagement and revenue per user. Robinhood, which became a publicly traded company this summer, has seen explosive growth with more than 22.5 million customers and doubled revenue in the most recent quarter from a year ago.

In order to offer stock trading to customers, it’s possible PayPal will partner with or buy an existing broker-dealer. According to one source, PayPal has held already discussions with potential industry partners.

Still, one source familiar with the idea said it was unlikely that the trading service would roll out this year. The sources spoke on condition of anonymity because PayPal’s plan was not public, and they were not authorized to share information about possible partnerships.

Shares of PayPal jumped more than 3% following the CNBC report, while Robinhood shares lost more than 3%.

If PayPal did look to get full approval as a brokerage firm alone, it would need to complete a new membership process through the industry’s main regulator, FINRA. That process could take more than eight months. PayPal has more than 400 million accounts worldwide.

A PayPal stock-trading launch would come at competitive time for the fintech industry. Square, PayPal, Robinhood and SoFi offer a list of overlapping products and describe the same mission of being a one-stop-shop for finance. Cryptocurrency and stock trading are seen as ways to keep consumers engaged on these payment platforms.

While helpful for user growth and revenue, the retail trading boom has also invited more regulatory scrutiny.

The Securities and Exchange Commission said last week it is stepping up its inquiry into “gamification” and how brokerages use technology to interact with their customers. The agency mentioned behavioral prompts used by online brokerages and investment advisors that may encourage investors to trade more stocks and other securities and take on more risks.

Shares of Didi are poised for double-digit gains this week amid a Bloomberg News report that Beijing is eyeing a plan to take the troubled ride-hailing giant under state control by acquiring a stake through government-run firms.

State-owned Beijing Tourism Group and other companies based in the city would invest in Didi under the early-stage proposal pending government approval, Bloomberg News reported, citing people familiar with the matter. The group could also take a so-called golden share with veto power and a board seat to gain control over Didi, the report said.

Didi, which went public on the New York Stock Exchange at the end of June, climbed more than 6% on Friday. That brings its weekly gain to 14%. Still, the stock has lost nearly half of its value since its initial public offering amid the regulatory pressure.

Didi didn’t immediately respond to CNBC’s request for comment. It’s unclear what impact state control would have on the ADR structure, which is what trades on the NYSE instead of normal common equity.

Didi is under a cybersecurity review after the Cyberspace Administration of China alleged the company had illegally collected users’ data. The ride-hailing giant was forced to stop signing up new users and its app was also removed from Chinese app stores.

Last week, the Wall Street Journal reported Didi was eyeing delisting plans and compensating investors for losses incurred since its U.S. IPO. Didi later denied the report.

Investors could also be buying the dip recently after getting more clarity on Beijing’s measures. China’s cyberspace regulator earlier this week laid out two main conditions for companies wanting to go public, including complying with national laws and regulations and ensuring the security of the national network.

The stock rose 10% last week.

The Securities and Exchange Commission is also stepping up its oversight on Chinese companies seeking a listing on U.S. stock exchanges. The agency said it will require additional disclosures about the company structure and any risk from future actions from the Chinese government.

— Click here to read the Bloomberg News story.

Activist firm Engine No. 1 after winning three board seats at Exxon is meeting with other oil companies in its climate change fight, a source familiar told CNBC’s David Faber.

The hedge fund has spoken with executives at several oil and gas corporations including Chevron, the source familiar told CNBC.

Engine No. 1 may not necessarily target Chevron in its next challenge, or any company at all, according to the source.

Chevron confirmed the meeting with Engine No. 1 to CNBC.

“We have contingency plans to respond to many different types of events, including an activist investor,” Chevron said in a statement to CNBC’s Leslie Picker. “We engage regularly with shareholders in constructive two-way dialogue and look forward to discussing the next chapter of our lower carbon story with them later this month.”

The Wall Street Journal first reported the activist firm’s meeting with Chevron.

Engine No. 1 gained two board seats at Exxon’s annual shareholder meeting in May, and a third seat in June.

The upstart activist firm has been targeting Exxon since December 2020, pushing the company to reduce carbon emissions in the face of a changing climate.

Engine No. 1 also launched an exchange-traded fund in June to further its shareholder activism focused on environmental, social and governance issues.

— CNBC’s David Faber, Leslie Picker and Pippa Stevens contributed reporting.