Nomura Rates Visa as “Buy”; Western Union Seen as “Value Trap” (V, WU)
On Monday, analyst Bill Carache of Nomura Securities reiterated his bullish rating on credit card issuer Visa Inc (V), while calling money transfer and payments firm The Western Union Company (WU) a “value trap.”
Nomura rates Visa as a “Buy” with a price target of $172. This valuation suggests a 5% upside to Monday’s closing price of $168.00.
Western Union is rated “Neutral” at Nomura with a price target of $13. This target suggests a 11% downside to Monday’s closing price of $14.66
“Although we’re not necessarily looking for meaningful additional downside for WU, we do see near-term upside as limited and expect data points in 1H13 to support V vs. WU divergence,” said Carache.
“We continue to view WU as a value trap based on our belief that its core money transfer business is in secular decline. With competition from digital money transfer channels such as prepaid, mobile, and internet likely to continue to intensify, we expect future pricing degradation to continue to weigh on WU’s revenue growth outlook,” he added.
Visa shares were up $1.11, or +0.68%, during pre-market trading on Tuesday. The stock is up +8.19% over the past year. Western Union shares were inactive in pre-market trading.
The Bottom Line
Shares of Visa Inc (V) have a dividend yield of 0.80% based on last night’s closing price of $164.00 and the company’s annualized dividend payout of $1.32 per share. Shares of The Western Union Company (WU) have a dividend yield of 3.41% based on last night’s closing price of $14.66 and the company’s annualized dividend payout of 50 cents per share.
Visa Inc (V) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars. The Western Union Company (WU) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.0 out of 5 stars.
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