We are reiterating our Neutral recommendation on
Western Union Co.
). We remain confident about the company's long-term growth
prospects; however, over the near term earnings will remain under
pressure due to competitive, regulatory and macroeconomic
Western Union's key business, Consumer-to-Consumer, has been
performing favorably for the past several years. We believe that
this business segment will continue to be attractive as worldwide
immigration is expected to continue to increase.
The company is also aggressively positioning its segment
Business Solutions in the rapidly growing cross-border payments
market for small to medium-sized enterprises.
Western Union is expanding internationally and is eyeing the
emerging economies of China and India, where the remittance
market is still under-penetrated. Another money transfer company,
Moneygram International Inc.
) also has an active presence in the Asian region.
The company is also aggressively growing its new age
technology offerings that include mobile, electronic, online
money transfer etc. The company also offers prepaid card
service for money transfer via
Nevertheless, this Zacks Rank #3 (Hold) company has a wide
agent network, which has grown rapidly over the past few years,
enhancing its global presence. The company is bent on achieving 1
million agent locations worldwide. We are of the view that this
ongoing investment in the brand and appointment of new agents
reflects the company's confidence in its market position.
On the flip side, Western Union is facing compliance-related
issues in certain markets such as Mexico and Latin America. This
regulatory headwind has caused agents in these regions loss and
consequent decline in revenue
Moreover, Western Union's business is dependent on the global
macroeconomic situation. Since the major economies of the world
are still in a weak position, the remittance volume may be
negatively impacted, causing restricted earnings.
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WESTERN UNION (WU): Free Stock Analysis
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