What Is Driving the Western Union Company (NYSE: WU) Stock?

Free $100 Forex No-Deposit Bonus

The Western Union Company (NYSE: WU) stock rose 0.38% on September 15th, 2020 (Source: Google finance) after Jason Kupferberg, BofA Securities upgraded the previous rating  from Neutral to Buy with an unchanged price target at $26. The stock rose over 0.5% on September 16th, 2020 (as of 11:40 am GMT-4 ; Source: Google finance).

As with other segments of the payments market, COVID-19 has accelerated Western Union’s mix shift away from legacy in-person transactions toward digital, according to Kupferberg. Digital now accounts 31% of total C2C transactions (up from 16% in 3Q19), and grew 96% in 2Q20 vs. an overall C2C transaction fall of 8%. Most of these transactions are through WU’s branded online/mobile platform, but the company is also increasingly leveraging Digital partnerships with third-parties such as Sberbank and Saudi Telecom. C2C transaction trends have proven to be more resilient than feared at the outset of COVID-19, cost takeout plans through 2022 are intact, and the analyst expects WU can comfortably generate ~ $2 of EPS power next year.

On the other hand, for the second quarter of 2020, the company’s revenue had declined 17% to $1.1 billion, compared to the prior year period, while adjusted constant currency revenue, which excludes the 2019 divestitures, declined 11%, mainly due to lower transaction levels resulting from the COVID-19 pandemic. Digital money transfer revenue rose 48% year-over-year, or 50% on a constant currency basis, to a record high of $219 million for the second quarter. Consumer-to-Consumer (C2C) revenues, which accounts 88% of total Company revenue in the second quarter, fell 12% on a reported basis, or 11% constant currency, while transactions fallen by 8%. Western Union Business Solutions revenues fell 17% on a reported basis, or 15% on a constant currency basis, due to softening trends in verticals more exposed to COVID-19, including education, travel and tourism, and small and medium-sized enterprises. The company posted adjusted operating margin was 20.4% compared to 20.3% in the prior year period. The margin expanded mainly due to productivity savings and additional cost management measures that more than offset the impact of revenue declines associated with COVID-19 and the 2019 divestitures. At the end of June, 2020, the Company had cash of $1.2 billion, no borrowings outstanding on its $1.5 billion revolving credit facility, and no significant debt maturities due until 2022.

Westernunion.com average monthly active customers for the second quarter rose 45% year-over-year and 33% sequentially from the first quarter, due to strong new-to-Western Union customer acquisition. Westernunion.com was the most downloaded mobile app among peer money transfer companies during the second quarter, according to data provided by mobile app marketing firm Sensor Tower.

Copyright © 2020. All Rights Reserved. FXDailyReport.Com
Risk Warning: Trading CFDs is a high risk activity and you may lose more than your initial deposit. You should never invest money that you cannot afford to lose. FXDailyReport.com will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets.