We are downgrading our recommendation on
The Western Union Co.
) to Underperform from Neutral following its third quarter earnings
release, in which the company trimmed its full-year 2012 earnings
expectations. The company slashed its earnings guidance to a range
of $1.60-$1.63 per share from a previous estimate of $1.68-$1.72
Moreover, stiff competition and a weak global economy is taking a
toll on its performance. Western Union is facing compliance-related
issues, particularly those linked to its Southwest Border
agreement. It has also recently witnessed challenges in its core
retail money transfer business in certain key markets.
The company is also facing strong competition from electronic
channels of money transfer. On the other hand, Western Union is
also facing management issues. Given a host of headwinds, we expect
the stock to remain under pressure in the near term.
WESTERN UNION (WU): Free Stock Analysis Report
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