Some of Trump's proposals raise considerable near-term event risk for the money transfer industry.
Brett Horn, CFA
10:09 AM | Email Article
We see the impending Trump presidency as a material negative factor for Western Union
. While it is difficult to assess how serious he is about pursuing some of the more outrageous proposals he has made regarding immigration, we would note that his campaign started with an emphasis on combating immigration into the U.S. and we think it is reasonable to assume it will remain a key issue for his administration. Western Union’s business is directly exposed to the level of the immigrant population. Further, some of the more extreme proposals he has floated raise considerable near-term event risk for the money transfer industry. As such, we are raising our uncertainty rating to very high and lowering our fair value estimate to $20. We are maintaining our wide-moat rating, as Western is relatively well placed to absorb industry shocks compared with peers, given its much higher operating margins and a lower percentage of U.S.-originated transfers.
Brett Horn, CFA, is a senior equity analyst for Morningstar.
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