UPDATE: J.P. Morgan Downgrades Western Union on Mixed Factors

In a report published Wednesday, J.P. Morgan analyst Tien-tsin Huang downgraded Western Union (NYSE: WU) from Neutral to Underweight, but raised the price target from $17.00 to $18.00.

In the report, J.P. Morgan noted, “We are downgrading WU to Underweight from Neutral as shares are trading at a rich historical PEG as expectations (implied by guidance) have risen for transaction growth acceleration, translating to revenue growth improvement next year. We also see accelerating growth, but primarily due to easy comps, and it is unclear to us if WU can deliver sustainable above-market growth in the mid term. We think there is more risk to the downside than upside on revenue growth, as we still believe WU is exposed to pricing reinvestment from regulation compliance and/or local competition, which we believe would not be well received given guidance for a return to normalcy on price investment. As such, we believe an UW rating is prudent.”

Western Union closed on Tuesday at $18.65.