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On Thursday, Goldman Sachs adjusted its outlook on Western Union Co. (NYSE:WU) shares, reducing the price target from $11.00 to $10.00 while maintaining a Sell rating. According to InvestingPro data, the stock currently trades at a P/E ratio of 3.68, significantly below industry averages, suggesting potential undervaluation despite challenges. The revision followed Western Union’s first-quarter earnings, which fell short of expectations due to lower-than-anticipated revenue, with recent data showing a 3.38% year-over-year revenue decline. This disappointing top-line performance was somewhat mitigated by a lower-than-expected tax rate.
Western Union has experienced ongoing challenges with its outbound North American volumes, particularly affected by geopolitical tensions impacting cross-border flows to Mexico. The Latin America and Caribbean (LACA) region also saw further declines, attributed to evolving migration patterns. Despite these headwinds, InvestingPro analysis indicates the company maintains a "GOOD" overall financial health score, with particularly strong marks in profitability metrics. These negative factors were partly balanced by sustained strength in the Consumer Services sector.
Despite these headwinds, Western Union has reaffirmed its financial guidance for the year, including predictions for revenue acceleration as the year progresses. The company acknowledged the increasing difficulty in forecasting revenue against a backdrop of dynamic geopolitical changes. Additionally, the guidance now incorporates the impact of a recently completed acquisition, which is expected to contribute approximately one percentage point to the company’s revenues—a detail that analysts believe was not previously well understood by the market.
Goldman Sachs analysts view the overall trends as weaker than anticipated, citing persistent revenue challenges due to the widening of spreads and the global shift towards digital remittances. The firm also points to Western Union’s vulnerability to changes in immigration policies worldwide. Despite these concerns, the analysts suggest that Western Union’s 9.3% dividend yield may provide some support for the stock price, and they consider a dividend cut unlikely in the short term. InvestingPro data reveals the company has maintained dividend payments for 20 consecutive years, while management has been actively buying back shares. For deeper insights into Western Union’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Western Union Co. reported its first-quarter earnings for 2025, meeting Wall Street’s expectations with an earnings per share (EPS) of $0.41. However, the company’s revenue slightly missed forecasts, coming in at $984 million compared to the anticipated $999.8 million. Despite this, Western Union’s operational efficiency program saved $30 million in the quarter, contributing to an operating cash flow of $148 million, which is up 50% year-over-year. The company also announced its acquisition of EuroChange, which is expected to add roughly 1% to revenue growth and be accretive in 2025.
Analysts from JMP maintained a Market Perform rating on Western Union, noting that while the company has strong cash flow and a high dividend yield, significant growth remains uncertain under the Evolve 2025 program. The guidance for 2025 includes benefits from the Eurobridge acquisition, indicating limited organic growth prospects. Meanwhile, Western Union’s digital platform saw a 14% transaction growth, and cross-border principal growth was strong at 10%, excluding Iraq. The company’s 2025 outlook projects adjusted revenue between $4.115 billion and $4.215 billion, with an adjusted EPS range of $1.75 to $1.85.
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