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Xoom May Finally Be Fully Valued, Susquehanna Warns; Firm Downgrades Stock

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In a report published Monday, Susquehanna Financial analyst James E. Friedman downgraded the rating on Xoom Corp (NASDAQ: XOOM) from Positive to Neutral, while lowering the price target from $31 to $24. The analyst believes that the competition is intensifying to the company.

The stock surged about 56 percent during Q2, much ahead its peers in Susquehanna's coverage universe. "While we are constructive on the shares longer term, we think consensus is full and the stock may move sideways in the interim," Friedman stated.

Data released by the World Bank indicates a modest decline in pricing in three of the company's major markets of India, Philippines and Mexico. "But late in the quarter both Moneygram International and PayPal (Venmo) made some revisions that may overlap. While none of these services may be as fast or elegant as Xoom, they are viable in our opinion," according to the Susquehanna report.

While Moneygram announced that it would charge only $4 to transfer $200 to Mexico and the Philippines, its services would be free for India. Moneygram is able to remit to the Philippines on the same day, and within one hour to Mexico and three hours to India.

PayPal, on the other hand, has been expanding and updating its services and is set to take Venmo international. "ACH costs $1, and $7.10 if using credit/debit cards to Mexico/India/Philippines (transfers usually within a day, max of seven days). Ria ACH is running free for India, $4 for Mexico and $3 for Philippines and takes four to five days to settle," Friedman reported.

Xoom, however, has maintained steady ACH pricing of $5 for the Philippines and Mexico, and $3 for India, with remittance either instant or within an hour.

Latest Ratings for XOOM

DateFirmActionFromTo
Aug 2015BarclaysDowngradesOverweightEqual-Weight
Jul 2015Stifel NicolausMaintainsBuy
Jul 2015BairdDowngradesOutperformNeutral

View More Analyst Ratings for XOOM
View the Latest Analyst Ratings

 

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Posted-In: James. E. Friedman Susquehanna VetrAnalyst Color Downgrades Price Target Analyst Ratings

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