Goldman Sachs Reiterates Neutral Rating on Western Union (WU)

Goldman Sachs is out with a research report this morning, where it reiterates its Neutral rating on Western Union Co. WU; it has a $20.00 price target on the stock. The GS analysts said that, against a lower revenue growth profile, they are retaining their Neutral rating and 12-month price target on WU shares. Into 2011 they see some signs that the firmwide operating margin has stabilized, its robust FCF is intact, and management remains committed to shareholder-friendly capital allocation through stock buybacks with a new $1 billion authorization. While they are comfortable with the direction of these fundamental trends, they also see few near-term catalysts for an improved revenue growth profile given continued pricing declines. As for valuation, the analysts remarked, “Our 12-month price target of $20 is based on a weighted average model that incorporates our sector-relative framework, CY11 P/E, and EV/EBITDA assumptions, implying a CY11E P/E multiple of 13.6X.”