NEW YORK (AP) — Shares of Western Union tumbled to their lowest point in more than three years on Wednesday as the company lowered its full-year earnings forecast.
THE SPARK: On Tuesday Western Union cut its earnings guidance to a range of $1.60 to $1.63 per share from a previous projection of $1.68 to $1.72 per share. Analysts polled by FactSet expect earnings of $1.75 per share.
For the third quarter, the company reported earnings of 45 cents per share on revenue of $1.42 billion. Wall Street predicted earnings of 45 cents per share on revenue of $1.47 billion.
Western Union also announced that the Stewart Stockdale, president of global consumer financial services, has left the company.
THE ANALYSIS: Citi Investment Research's Ashwin Shirvaikar said that Western Union's third-quarter performance was disappointing, as it deals with increased competition and difficult economic conditions. The analyst said that the revised full-year forecast implies slower earnings per share growth this year and likely declines in earnings per share next year.
Weakening fundamentals and announced strategic changes — like price cuts — may add uncertainty to future prospects and feed into fears about the long-term competitive positioning of the business, Shirvaikar added.
The analyst maintained a $24 price target and "Buy" rating.
Thomas McCrohan of Janney Capital Markets lowered the company's price target to $20 from $24 and kept a "Buy" rating. In a client note the analyst said that while Western Union reported decent third-quarter results, its outlook is a bit lackluster.
Moody's Investors Service, meanwhile, said Western Union's investment-grade A3 rating will likely be under pressure in the near term. It cited the company's lower 2012 guidance, its plans for generating organic revenue growth, and its plans for ongoing shareholder-friendly actions.
SHARE ACTION: Western Union Co.'s shares fell $5.13, or almost 29 percent, to $12.80 in late trading. The shares hit $12.48 earlier in the session, their lowest point since March 2009.