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We are reiterating our Neutral recommendation on Western Union Co. (WU - Analyst Report).  We remain confident about the company’s long-term growth prospects; however, over the near term earnings will remain under pressure due to competitive, regulatory and macroeconomic headwinds. 
 
Why Reiterate?
 
Western Union’s key business, Consumer-to-Consumer, has been performing favorably for the past several years. We believe that this business segment will continue to be attractive as worldwide immigration is expected to continue to increase. 
 
The company is also aggressively positioning its segment Business Solutions in the rapidly growing cross-border payments market for small to medium-sized enterprises.
 
Western Union is expanding internationally and is eyeing the emerging economies of China and India, where the remittance market is still under-penetrated. Another money transfer company, Moneygram International Inc. (MGI - Analyst Report) also has an active presence in the Asian region. 
 
The company is also aggressively growing its new age technology offerings that include mobile, electronic, online money transfer etc.  The company also offers prepaid card service for money transfer via MasterCard Inc. (MA - Analyst Report)
 
Nevertheless, this Zacks Rank #3 (Hold) company has a wide agent network, which has grown rapidly over the past few years, enhancing its global presence. The company is bent on achieving 1 million agent locations worldwide. We are of the view that this ongoing investment in the brand and appointment of new agents reflects the company’s confidence in its market position.   
 
On the flip side, Western Union is facing compliance-related issues in certain markets such as Mexico and Latin America. This regulatory headwind has caused agents in these regions loss and consequent decline in revenue
 
Moreover, Western Union’s business is dependent on the global macroeconomic situation. Since the major economies of the world are still in a weak position, the remittance volume may be negatively impacted, causing restricted earnings.

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