Bank of America Remains Optimistic on Moneygram International as Shares Hit New 52-Week Low

In a report published Monday, Bank of America Merrill Lynch analyst Sara Gubins maintains a Buy on

following

announcement of a new private-label money transfer service. To better reflect the loss, the analyst lowered the price target on Moneygram from $23.00 to $19.00. On April 17, Wal-Mart announced that it will offer a new private-label money transfer service operated by

. Wal-Mart will charge $4.50 for $0-50 & $9.50 for $50-900. Bank of America noted that Wal-Mart to Wal-Mart transactions represented thirteen percent of Moneygram International's 2013 revenue, or nine percent of revenue ex commissions. Gubins remarked that this is a “significant” loss for Moneygram, but believes that the news is priced in as shares were down 18 percent on April 17. The analyst lowered revenue by nine percent in 2014 and 13 percent in 2015 to account for lower Wal-Mart transactions. Corporate expenses were also pulled down by five percent and 6.5 percent in 2014 and 2015, respectively. Bank of America remodeled adjusted EPS for 2014 and 2015 to $1.17 and $1.22. Gubins commented that she sees upside to shares given the current low valuations, growth in non- Wal-Mart transactions and an improving macro environments. Shares of Moneygram International closed at $14.81 on Thursday. The stock hit a new 52-week low on Monday at $12.45, tumbling more than 18.96 percent.