Credit Suisse Comments On Western Union Following Meeting With CFO

Credit Suisse Recently hosted Western Union's WU CFO, Scott Scheirman, who presented a positive outlook. The company typically grows volume 50 to 100 bps above IATA's expected remittance growth, primarily through share gains. IATA expects remittances to grow ~5% Y/Y in 2011. Pricing pressure is expected to decrease in 2011 and to fall in line with long-term trends. WU expects the Business Solutions to expand in the mid-teens in 2011, partially offset by a decline in US Bill Payment revenues.

WU expects electronic channels, prepaid, and PSD to each contribute ~1% incremental revenue. Credit Suisse believes that WU's FY11 revenue guidance of 3%-4% could prove conservative due to a turnaround in remittance volume and a boost from the new initiatives. The Gulf region's outbound remittance volume turned positive in 4Q10, and WU does not expect any remittance impact from the Middle East crisis since Egypt accounts for less than 1% of revenues and Libya much less. WU has no exposure to Japan and would expect Asia Pacific to continue its solid 14% transaction and volume growth in 4Q10.

Credit Suisse has a $25 PT and Outperform rating on WU

WU closed Monday at $20.95