MoneyGram Rose 43% Due to Western Union Takeover Offer

Western Union (NYSE:WU) stock rose 6.2% in pre-market trading at 5:38 AM ET today. The stock rose due to reports that Western Union plans to acquire MoneyGram International (NYSE:MGI). The transaction would combine two of the largest money-transfer services in the US.

According to a Bloomberg report, “Western Union has made a takeover offer for MoneyGram, said the person, who asked not to be identified because the matter isn’t public. No decision has been made and Western Union could opt to proceed without a deal, the person said.”

However, Western Union and MoneyGram International didn’t comment on the matter. MoneyGram International stock also rose 43% in pre-market trading today.

Q1 earnings results

Western Union generated revenue of $1.19 billion—a decrease of 11% from the first quarter of 2019. The company missed Wall Street analysts’ consensus revenue estimate of $1.22 billion. The company posted an adjusted net profit of $185.9 million during the quarter—a 4.2% rise YoY (year-over-year). In the first quarter, Western Union reported an adjusted EPS of $0.44 compared to $0.41 in the first quarter of 2019. The earnings beat analysts’ consensus estimate of $0.41 per share.

In the first quarter, MoneyGram reported an adjusted EPS of -$0.05 compared to -$0.06 in the first quarter of 2019. MoneyGram generated sales of $290.9 million—a reduction of 7.8% from the first quarter of 2019. Wall Street analysts expected the company to post an adjusted EPS of -$0.05 on sales of $292.7 million.

Analysts’ recommendations for Western Union

Among the 20 analysts following Western Union stock, two recommend a “buy,” 11 recommend a “hold,” and seven recommend a “sell.” Analysts’ mean target price on the stock is $20.07, which implies a 3.1% loss from the current level of $20.71. The consensus target price for the stock has fallen from $20.69 in May—a fall of 3.0%.

Last month, Credit Suisse increased its target price from $19 to $20 on Western Union stock, while KBW increased its target price from $19 to $20. RBC reduced its target price on the stock from $26 to $23.

Technical level

Western Union stock rose 3.5% on Monday and closed at $20.71 with a market capitalization of $8.5 billion. The stock was trading 27.2% below its 52-week high of $28.45. Meanwhile, the stock was trading 19.1% above its 52-week low of $17.39.

Based on the closing price on Monday, Western Union stock was trading 7.0% above its 20-day moving average of $19.35. The stock is also trading 7.8% above its 50-day moving average of $19.22 and 6.9% below its 100-day moving average of $22.24. The 14-day relative strength index number is 60. The number indicates that the stock isn’t overbought or oversold.

On Monday, the Dow Jones Industrial Average and the S&P 500 rose 0.36% and 0.38%, respectively. Read Could Trump’s News Conference Trigger a Market Crash? to learn more.