A Wall Street analyst upgraded Fiserv Inc.'s stock on the strength of the core processing company's deal to buy the Atlanta electronic transaction firm CheckFree Corp. for $4.4 billion, or $48 a share.
He and two other analysts downgraded CheckFree, citing a lack of headroom after its shares jumped 23%, to around $45, when the cash deal was announced last week.
John Kraft, an analyst at D.A. Davidson & Co., upgraded Fiserv's stock on Monday to "buy," from "neutral," and downgraded CheckFree to "neutral," from "buy."
Mr. Kraft estimated that the acquisition would add $1.17 billion to Fiserv's revenue and more than $300 million to its pretax earnings next year.
The Brookfield, Wis., company would get a lift from CheckFree's strength in online bill payments, he wrote in a note. "This technology fits extremely well with Fiserv's 6,000-plus financial institution customer base, as Fiserv will finally be able to offer a full front end suite of products."
Tien-Tsin Huang, an analyst at JPMorgan Securities Inc., downgraded CheckFree to "neutral," from "overweight."
CheckFree is now trading "in line with peers, prompting us to move to the sideline," Mr. Huang wrote in a note.
The shares are still trading at a discount to the acquisition price, offering an opportunity for arbitrage, he added, "as we have high confidence that the deal will close."
David Koning, an analyst at Robert W. Baird & Co., downgraded CheckFree on Friday to "neutral," from "outperform."
On Monday he and others noted that CheckFree's earnings for its fiscal fourth quarter report, ended June 30, exceeded Wall Street's expectations.
CheckFree reported last week that its net income fell 5.4% from a year earlier, to $27.9 million, though revenue grew 23%, to $276.7 million.
During the quarter CheckFree bought three companies: the check-processing software firm Carreker Corp. in April; the online banking software maker Corillian Corp., of Portland, Ore., in May; and Upstream Technologies LLC, a developer of online tools for asset managers, in May.
