MoneyGram stock hits new yearly low after weak outlook

MoneyGram International (MGI) stock hit a new yearly low of $5.86 on Friday after showing signs of weakness in revenue outlook for the full year. MoneyGram has been facing immense competition from First Data Corp. (FDC), United States Postal Service, The Western Union Co. (WU), and PayPal (PYPL). Apart from these, the digital payments industry with its easy online transfer is putting new pressure.

The banking industry is undergoing a change whereby mobile banking is set to replace online banking by 2023 as smartphones have been used as a payment method. Also, cryptocurrencies too remained a viable option for payments and could be sent without incurring additional charges.

In the second quarter results, MoneyGram reported a 63% dip in earnings due to a 9% decline in revenue, and higher other expenses, despite a positive income tax benefit. Higher compliance standards and the Walmart2World service have impacted the results.

MoneyGram said its 2018 business restructuring initiatives are underway and it is on track to deliver projected cost savings. The company introduced MoneyGram online in Australia as well as several new countries in Europe. MoneyGram is now online in 11 countries with many more launches set for the coming months.

Looking ahead into the full year 2018, MoneyGram expects constant currency revenue to decline by 4-6%. Market analysts expect revenue to decrease by 3.90% for the full year. On a constant currency basis, adjusted EBITDA is predicted to decline by 8-10%.

MoneyGram stock hit a new yearly low of $5.86 on Friday after showing signs of weakness in revenue outlook for the full year.

All analysts are recommending a “hold” rating on the stock with an average price target of $7.25. Most of the analysts have lost hopes in the company’s future and have backed out from the recommendation circle.

In a step to retaining customers and attracting more crowd, MoneyGram has expanded digital and mobile capabilities. The company has capitalized on the strength of its physical network with both new agent signings and renewals of long-term partners. It has lowered costs by implementing the Digital Transformation initiative and implemented higher compliance standards.

In addition, MoneyGram has started entering into a pact with Mexico’s Grupo Elektra, Visa (V), and UK Post Office Limited for money transfer services.

Shares of MoneyGram ended Friday’s regular trading session down 7.44% at $6.10 on the Nasdaq. The stock has fallen more than 62% for the past year and 55% for the year-to-date.