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Western Union (NYSE:WU) was downgraded to Sell from Neutral, with its price target cut to $12 from $18 by UBS analysts on Friday.
The analysts outlined three reasons for the rating change, including the company still losing market share despite its price cuts.
“Western Union provided a lackluster outlook for a 2-4% adjusted revenue decline in 2023. We model slightly below the low end of that outlook. While UBS’ economics team doesn’t forecast a global recession, unemployment rates in key markets are expected to rise in 2023, including the UK (up 30 bps) and Canada (up 60 bps). A recession provides incremental risk given that management indicated its 2023 forecast does not include deterioration from current macro trends,” the analysts wrote.
They added that, in the last three months, UBS Evidence Lab data suggests Western Union significantly decreased digital pricing in four major corridors.
“Western Union’s dividend yield as a reason for investment appears less attractive given the rise in interest rates. Last week, management provided preliminary 3Q/22 results and gave 2023 financial guidance that will unlikely change when it officially reports earnings on 11/1/22. Thus, it could take some time for share depreciation to play out,” the analysts concluded.
