Fiserv Inc.'s acquisition of First Data Corp. aims to create the second-largest fintech company in the U.S. — but First Data already had 2019 pegged as a transformational year, and striking a deal now could wall off a far richer valuation, analysts said.

For years, investors have focused on First Data's massive debt load and troubled North American merchant processing business. But analysts have lauded its operational turnaround over the past few quarters, a turnaround the all-stock $22 billion transaction might validate. Analysts have also eyed this year as bringing several more catalysts that they expected to drive First Data's stock higher, from working to join a major equities index to renewing a key joint venture agreement.

Letting the market absorb those wins could have pushed any acquirer's offer price higher, analysts said. First Data's stock rose 18.35% from the close of Jan. 15, the day before the deal's announcement, to its opening price of $20.76 on Jan. 16.

One of First Data's top priorities has been to qualify for inclusion in a major index, which would open its stock to a broader set of investors. First Data planned to do that in 2019 by renegotiating its $17 billion in debt and restructuring its share ownership classes. And in the second half of 2019, First Data expected to renew its joint venture with Bank of America Corp. and roll out digital onboarding, said MoffettNathanson analyst Lisa Ellis.

Those catalysts, combined with the company's low valuation compared with peers, made First Data the "highest risk-reward stock" in the payments space, Ellis said.

Ahead of the merger announcement, Ellis had a $24 price target on First Data. At Bernstein, analyst Harshita Rawat had a $25 price target for the stock. On the day the deal was announced, the consensus target price averaged across more than 20 analysts was above $25, according to S&P Global Market Intelligence data. Fiserv is paying $22.74 per share to acquire the company.

Ellis, who had spoken to the First Data executives, said the company saw the deal as creating "tremendous" long-term value.

"We still feel like Fiserv got a really good deal," Ellis said in an interview. But First Data was "not going to split hairs around what the deal price should be at this point."

Not all analysts agree that Fiserv got the better end of the deal. Nomura analyst Dan Dolev said in an interview that Fiserv helped First Data "hit the escape button" and that he believes Fiserv will now be saddled with the same issues that plagued First Data, including a debt load that Fiserv has not dealt with before.

The deal was a good one for Fiserv from a financial perspective, given the gap between the purchase price and First Data's peak. "[But] operationally, the jury's still out," Dolev said.

First Data's North American merchant processing business, which is nearly 50% of the company's overall business, has struggled compared to industry peers. Most merchant processors focusing on small business — such as Global Payments Inc., Square Inc. and PayPal Holdings Inc. — have performed well in recent quarters. But First Data is "structurally flawed" because it caters to national retailers, Wedbush analyst Moshe Katri said in an interview.

Companies such as Square cross-sell other services to small-business customers, Katri said. By targeting national retailers, First Data misses that opportunity. Several years ago, First Data launched Clover, a cloud-based point-of-sale system that aimed to penetrate the small-business market. But Clover, which some liken to Square's offering, did not move the needle, Katri said.

Another potential concern is the combined company's ability to meet the lofty goals they set to cut costs and boost revenue.

David Lamoureux, president and managing partner at consulting firm The Continental Divide Group, said the synergy numbers are "more aggressive" than what Vantiv Inc. — now known as Worldpay Inc. — put out when it acquired Worldpay Group PLC in 2017. The CEOs of Fiserv and First Data talked about geographic similarities on a call to discuss the deal, but they did not dig into where the cost cuts and new revenue would appear. The companies expect to cut $900 million in costs by eliminating duplicative overhead, streamlining their technology infrastructure and optimizing the combined company's global footprint. At the same time, the companies expect to find $500 million in revenue synergies, driven by a focus in bank merchant services and Clover, among other efforts.

"A company with less overlap is claiming higher synergies than the next-largest merger we've ever seen in this space, without a lot of estimation on how they intend to get there," Lamoureux said in an interview. "It's probably not a great day to be middle management on an [administrative] line item at First Data."