BofA Upgrades Western Union After Q2 Earnings Sell-Off

The decline in The Western Union Company’s WU stock since the second-quarter print does not seem justified, and the stock’s risk-reward appears compelling, according to BofA Securities.

The Western Union Analyst: Jason Kupferberg upgraded Western Union from Neutral to Buy with an unchanged $26 price target. 

The Western Union Takeaways: 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, Kupferberg said in the Tuesday upgrade note.

“Digital now represents 31% of total C2C transactions (up from 16% in 3Q19), and grew 96% in 2Q20 vs. an overall C2C transaction decline 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,” the analyst said. 

“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 we believe WU can comfortably generate ~ $2 of EPS power next year.”

WU Share Price: Shares of Western Union were trading 0.43% higher at $22.44 at last check Tuesday.

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