Western Union (WU) Reports In-Line Results; Compass Point Remains Neutral

Compass Point reiterated a Neutral rating and $20.00 price target on Western Union Co. (NYSE: WU) following relatively in-line 3Q15 earnings results. Adjusted EPS of $0.45 barely beat consensus of $0.44. WU.com revenues grew 28% YOY on a constant currency basis, flat sequentially but still above the 23% growth in 1Q15. Management's cost cutting efforts contributed $6M of incremental savings in the quarter and brings the year-to-date total to approximately $27M, on pace to reach the high end of management's previous guidance.

Analyst Michael Tarkan commented, "We reiterate our Neutral rating and $20 price target on WU following relatively in-line 3Q15 results as both revenues and expenses came in slightly ahead of our estimates. Ultimately, while WU's geographic diversification has provided insulation against industry-wide pricing pressure, the company is still not immune from an intensifying competitive landscape that we expect will continue to erode profitability over the long term. Management remains the most active in returning capital to shareholders versus peers, but leverage remains high. With shares trading at 11x our 2016 estimate, risk/reward appears balanced, in our view."

For an analyst ratings summary and ratings history on Western Union Co. click here. For more ratings news on Western Union Co. click here.

Shares of Western Union Co. closed at $19.01 yesterday.

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