Susquehanna has revised its outlook on Western Union (WU, Financial), lowering the financial firm's price target on the company's stock to $11 from the previous $12. Despite maintaining a Neutral rating, the decision reflects challenges and opportunities within Western Union's recent performance.
The company reported a notable 14% increase in Branded Digital transactions, highlighting strong growth in its digital segment. However, Western Union faced a 2% decline in total Consumer Money Transfer adjusted revenue when excluding transactions in Iraq.
Some regional variances have emerged, with Europe displaying positive trends, due to an improvement in operations there. At the same time, digital transactions continue to showcase resilience and durability. In contrast, North America's performance remains volatile, impacted by ongoing geopolitical and macroeconomic uncertainties. These mixed results underscore the complexities facing Western Union as it navigates through diverse market conditions.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 13 analysts, the average target price for The Western Union Co (WU, Financial) is $11.31 with a high estimate of $15.00 and a low estimate of $9.00. The average target implies an upside of 11.85% from the current price of $10.11. More detailed estimate data can be found on the The Western Union Co (WU) Forecast page.
Based on the consensus recommendation from 19 brokerage firms, The Western Union Co's (WU, Financial) average brokerage recommendation is currently 3.4, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for The Western Union Co (WU, Financial) in one year is $13.21, suggesting a upside of 30.66% from the current price of $10.11. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the The Western Union Co (WU) Summary page.
WU Key Business Developments
Release Date: April 23, 2025
- Revenue: $984 million for Q1 2025.
- Adjusted Revenue: Down 2% excluding Iraq.
- Transaction Growth: 3% overall; 14% in branded digital business.
- Cross-Border Principal Growth: 10% on a constant currency ex Iraq basis.
- Adjusted Earnings Per Share (EPS): $0.41, down $0.04 from the previous year.
- Adjusted Operating Margin: 19%, compared to 20% last year.
- Consumer Money Transfer (CMT) Transactions: Grew 3% in the quarter.
- Branded Digital Revenue Growth: 8% in the quarter.
- Cash Flow from Operations: $148 million, up 50% year-over-year.
- Capital Expenditures: $24 million, down 30% year-over-year.
- Cash and Cash Equivalents: $1.3 billion.
- Debt: $2.8 billion.
- Leverage Ratios: 2.8 times gross and 1.5 times net.
- Shareholder Returns: Over $150 million via dividends and stock repurchases.
- 2025 Revenue Guidance: $4.115 billion to $4.215 billion.
- 2025 Adjusted Operating Margin Guidance: 19% to 21%.
- 2025 Adjusted EPS Guidance: $1.75 to $1.85.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Western Union Co (WU, Financial) reported a seventh consecutive quarter of above 3% transaction growth, excluding Iraq, Russia, and Belarus.
- The company's branded digital business continues to perform well with 14% transaction growth and 8% adjusted revenue growth in the quarter.
- Europe showed strong performance with 10% transaction growth, leading to regional revenue growth of 5%.
- The acquisition of Euro Change is expected to add roughly 1% to revenue growth this year and is anticipated to be accretive in 2025.
- The company achieved $30 million in operational efficiency savings in the quarter, bringing total savings to $140 million, ahead of schedule.
Negative Points
- Adjusted revenue, excluding Iraq, declined 2% due to a difficult macro environment and tough comparisons against the previous year.
- The Americas faced geopolitical headwinds, with North America transaction growth about 100 basis points lower and LACA about 200 basis points lower than the previous quarter.
- Consumer Services adjusted revenue was down slightly due to a decline in the bill payment business in Latin America and a seasonally slow quarter for advertising and European travel.
- Adjusted earnings per share decreased to $0.41, down $0.04 from the same quarter last year, partly due to lower revenues from Iraq.
- The retail business in North America is underperforming, primarily due to geopolitical issues and slowing migration trends.
