MoneyGram International (MGI) continues lower following a downgrade to market perform from market outperform at JPM Securities, which also removed a $25 price target.
In addressing the downgrade and how it relates to MGI’s previous partnership with Wal-Mart (WMT), JMP Securities states we “estimate that over one-third of the company’s pro forma pre-tax earnings are associated with domestic Walmart-to-Walmart transactions, and there are little-to-no direct costs that can be cut meaningfully if the company loses a significant percentage of these transactions to the new white label service,” reported Barrons.
In other chatter, a Seeking Alpha article points out the WMT announcement is “quantifiably negative for MoneyGram” as MGI derives 13% of revenue from money transfers between WMT locations.
The sell-off in this global payment services continues, down 29% from Wednesday’s close, following Wal-Mart’s (WMT) Thursday announcement of entering the retail money-transfer business.
Shares hit a new 52-week low of $12.45 before settling in at current prices near $12.70 per share, down 14.3%, in afternoon Monday trading. Shares now trade with a 52-week price range of $12.45 – $24.88 per share.
WMT is down 0.2% at $77.54 per share.