Election Increases Risk for Western Union

Brett Horn: The recent election presents some headwinds and some event risk for Western Union. In our view, a more intolerant, nativist administration is likely to have a chilling effect on immigrant population growth in the U.S., and Western Union is directly exposed to that. As a result, we've lowered our long-term growth forecast for the company.

Additionally, some of the more extreme proposals that Trump has floated--such as large scale immigrant deportation; he has also threatened to freeze U.S. to Mexico remittances to leverage Mexico to pay for the law that he has proposed--these obviously could have a very disruptive impact on the industry. U.S. to Mexico, where most of his comments have focused, represent only 5% of the business, but U.S.-originated transfers overall represent about a quarter of the business and we would expect a fairly wide impact.

On the positive side, looser regulation could be a benefit. Additionally, Republican proposals could allow them to repatriate some foreign cash without paying the tax penalty. But at this point, the benefits on that side seem fairly nebulous.

Overall, our view is that incoming Trump administration materially raises risk for Western Union until we have a better sense of what he actually intends to do.