Western Union (NYSE:WU) shares rose nearly 3.6% in early Thursday premarket trading after the company reported Q2 results, with EPS of $0.51 coming in better than the consensus estimate of $0.39.
Revenue grew 3% year-over-year (or 9% on a constant currency basis) to $1.17 billion, beating the consensus estimate of $1.04B.
“Growth in our C2C transactions was the highest since 2021, primarily driven by our branded digital go-to-market program. We also experienced an increase in revenue from Iraq arising from prior changes in Iraqi monetary policies,” said CEO Devin McGranahan.
The company raised its fiscal 2023 revenue and EPS outlook due primarily to business performance in Iraq. 2023 GAAP EPS is expected in the range of $1.63 to $1.73 (vs. prior $1.53-$1.63), compared to the consensus estimate of $1.62. Revenue growth is now seen at (5%)-(3%), compared to the previous range of (9%)-(7%).
JPMorgan analysts hiked the price target by $1 to $13 per share on Underweight-rated shares.
"We like the direction under new leadership and see limited valuation downside, but remain patiently on the sidelines to evaluate pace and execution of tricky turnaround."
Goldman Sachs analysts also reiterated a Sell rating.
"Results were better than expected as a result of the one-time boost from Iraq, which drove significantly higher revenues as well as relatively strong margins. Underlying trends in the business were roughly in line with the guidance raise largely reflecting the discrete Iraq benefit," they said.
(Additional reporting by Senad Karaahmetovic)