MoneyGram To Expand Visa Debit Card Service In Europe; Shares Jump 7.3%

Shares of MoneyGram jumped 7.3% on Jan. 22 after the payments transfer company announced a deal to expand its Visa debit card deposit service across Europe. The company, through its tie-up with Checkout.com, will use Visa’s push payments platform, Visa Direct, to send money in real-time.

As a result of the collaboration MoneyGram’s (MGI) customers will be able to send money to Visa debit cardholders across Europe through its website or mobile application.

The cross-border P2P (peer-to-peer) payments transfer company is increasingly concentrating on its digital direct-to-consumer strategy through its consumer channel. The digital channels include transactions made through its mobile app, website, through its digital partners, online wallets, or account deposit services. (See MGI stock analysis on TipRanks)

In 3Q20, total digital transactions comprised 27% of the company’s money transfer transactions. MoneyGram’s money transfer revenue generated through its digital channels amounted to $53.2 million in 3Q20 versus $27.3 million during the same quarter a year ago.

Alex Holmes, MoneyGram CEO commented at its 3Q earnings in October, “Our customer-centric strategy and growing active customer base helped deliver year-over-year money transfer revenue growth for the quarter, while the strength of our Adjusted EBITDA and cash flow demonstrate how our investments to build a scalable infrastructure are paying off. It’s exciting to see the successful execution of our digital transformation be a catalyst for sustainable and profitable growth.”

On Jan. 11, Northland Securities analyst Michael Grondahl upgraded the stock from Hold to Buy and set a price target of $9.50.

In an earlier report, Grondahl noted about the company’s focus on its digital channels, “The MGO business is by far the largest single originator of transactions, becoming virtually equivalent to the size of the Walmart money transfer business. 85% of digital transactions are now done via a mobile device. Digital now represents 27% of money transfer transactions providing significant contribution to bottom-line results. We believe only about 75% of walk-in business was live, flat q/q.”

Overall, Wall Street analysts have a Hold consensus on the stock based on Grondahl’s Buy call and one analyst recommending a Sell. The average price target of $7 implies 8.4% upside potential to current levels.

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