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Bangalore: Western Union Co, one of the world's largest money transfer company, raised its earnings growth target, forecast 2008 profit and revenue above analysts' views, and set a $1 billion stock buyback programme, sending its shares up as much as 10.1 per cent to a record high.
Chief Executive Christina Gold said the Englewood, Colorado-based company expects to benefit from new products, expansion beyond its core US operations, and cost cutting.
Western Union boosted its long-term target for annual earnings per share growth to a range of 15 per cent to 18 per cent from a range of 12 per cent to 14 per cent. It maintained its target for annual revenue growth at 10 per cent to 12 per cent.
"The official raise is comforting as it suggests management confidence that margins can stay stable," Tien-tsin Huang, an analyst at JPMorgan, wrote in a report. Western Union also said 2008 profit excluding special items will likely be at the high end of its projected range of $1.25 to $1.29 per share, with revenue rising at the high end of its 9 per cent to 11 per cent growth forecast. That suggests revenue of $5.44 billion, based on reported 2007 revenue of $4.9 billion.
Forecast
Analysts on average expected profit of $1.27 per share on revenue of $5.42 billion, according to Reuters Estimates.
The company said full-year profit including restructuring charges will be $1.18 to $1.22 per share, compared with its prior forecast of $1.19 to $1.23, reflecting this month's closure of a San Francisco facility. It said cost cuts will save $10 million in 2008 and $35 million a year thereafter.
In April the company reported that first-quarter profit rose 7 per cent to $207.1 million, or 27 cents per share, helped by rapid growth in China and India and improved business in Mexico.
Western Union said its $1 billion repurchase authorisation covers 6 per cent of reported shares outstanding, based on Thursday's closing stock price, and is in addition to $1.7 billion previously authorised.
The company had 740 million shares outstanding as of April 30, a regulatory filing shows.
Western Union said it operates through a network of more than 345,000 locations in more than 200 countries and territories.
In afternoon trading, Western Union shares were up $1.97, or 8.5 per cent, to $25.13 on the New York Stock Exchange, after earlier rising to $25.49.
Through Thursday, the shares had fallen 4.6 per cent this year, compared with a 2.4 per cent decline in the Standard & Poor's Data Processing Services index.
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