Morgan Stanley Reiterates Underweight on Western Union, Warns of Execution Challenges

Core Viewpoint - Morgan Stanley maintains an Underweight rating on Western Union Co. with a price target of $7, highlighting elevated execution risks despite clear medium-term financial targets [1] Financial Goals - Western Union aims for a compound annual revenue growth rate of 7%, or 3% excluding the Intermex acquisition, targeting total revenue between $4.8 billion and $5.3 billion by 2028 [2] - Adjusted earnings per share are projected to reach $2.30, indicating an 11% compound annual growth rate [2] Revenue Projections - Digital payments revenue is expected to grow organically by 8%, reaching up to $1.5 billion, while retail revenue is forecasted to decline by 4% to approximately $2.2 billion, excluding Intermex [3] - Consumer services are anticipated to expand the fastest, with a projected annual growth rate of 20%, potentially reaching up to $1 billion [3] Cash Flow and Cost Efficiencies - Management expects to generate $1.7 billion in free cash flow over the next three years, aided by $150 million in cost efficiencies [4] - However, achieving these financial goals may be challenging due to declining retail volumes in North America and competitive pressures in key U.S.–Latin America corridors [4] Integration and Growth Risks - Risks are associated with integrating Intermex and replicating the European turnaround strategy in North America, with forecasts indicating only 1% revenue growth excluding Intermex between 2025 and 2027 [4]