Although Western Union Co (NYSE:WU) unexpectedly reported its first-quarter adjusted earnings 30% below estimates, management kept its full-year guidance unchanged, implying an acceleration in earnings in the second half of the year, according to JPMorgan.
The Western Union Analyst: Analyst Tien-tsin Huang maintained an Underweight rating and price target of $9.
The Western Union Thesis: Despite reporting its first-quarter revenue of $983 million above Street expectations of $961 million, the company posted a 40% year-on-year decline in adjusted earnings, Huang said in the note.
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He added that statements from Western Union indicate that 50% of the earnings miss was due to items management expected, namely:
- Lower fixed cost coverage in owned locations, especially in Consumer Services following its close of Eurochange in April 2025
- Timing of vendor incentives
- Higher cost of new strategic partnerships
"Recall that last quarter, Western Union named a number of agent wins that were competitive takeaways, including Kroger going exclusive, the Deutsche Post, and the Canada Post, which likely required incremental investments in 1Q that should pay back later," the analyst wrote.
The remaining 50% of the earnings miss was due to currency impact and incremental investments in the company's digital asset strategy and replacing legacy systems, he further stated.
While a higher tax rate also contributed to the miss, this was partially offset by share repurchases, Huang said.
Management reaffirmed their full-year guidance, which implies an earnings acceleration in the back half of 2026 and "raises the execution bar," the analyst mentioned. Although management has a "strong track record" of execution, the challenge is that the company will be operating in a macro and geopolitical environment, balancing three acquisitions and launching of several initiatives, he added.
WU Price Action: Western Union shares were up 4.61% at $9.31 at the time of publication on Monday, according to Benzinga Pro data.
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