Although shares of The Western Union Company (NYSE: WU) have significantly outperformed the S&P500 since early April, visibility into the company’s performance through 2020 and 2021 remains limited, according to BofA Securities.
The Western Union Analyst
BofA’s Jason Kupferberg downgraded Western Union from Buy to Neutral and raised the price target from $23 to $26.
The Western Union Thesis
Western Union’s stock has recently been propelled by an investor preference for value names, media reports of a potential merger with MoneyGram International Inc (NASDAQ: MGI), and a better-than-anticipated mid-quarter update on June 2, Kupferberg said in the Wednesday downgrade note. (See his track record here.)
The strategic value of acquiring MoneyGram International is questionable, since both companies “face very similar potential longer-term structural headwinds related to industry competition and technology disruption,” the analyst said.
Regarding the mid-quarter update, he said that transaction growth in Western Union’s core consumer-to-consumer business seems to be progressing well.
This may not significantly contribute to revenue growth given the digital-heavy mix, especially where Western Union merely acts as a backend processor, Kupferberg said.
“While we continue to believe WU's consumers are more resilient than the Street thought, visibility on estimates this year and next remains limited, and we see risk/reward as balanced.”
WU Price Action
Shares of Western Union were down 3.69% at $23.51 at the time of publication Wednesday.
72 Biggest Movers From Yesterday
Euronet Worldwide: DA Davidson's Payments Alternative To Western Union, MoneyGram
Photo by Usien via Wikimedia.
Latest Ratings for WU
|Jun 2020||B of A Securities||Downgrades||Buy||Neutral|
|May 2020||Keefe Bruyette & Woods||Maintains||Market Perform|
View More Analyst Ratings for WU
View the Latest Analyst Ratings
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