Western Union (WU) faces growth headwinds from US immigration policy, stiff competition from digital players, and aggressive pricing from money remittance providers, Oppenheimer said in a Monday research note.

Western Union is "defending" its market share via investments in digital transformation, strategic pricing, and collaborations with fintechs and card networks. The company delivered retail segment improvement via local market specialization and enhancing point-of-sale experience for its agents, according to the research note.

The company is also prioritizing the transition from physical locations to its digital platform across countries and expanding its core remittance offering to include diverse financial products for clients, according to analysts.

Western Union is also striving to enhance service quality, ramp self-service options facilitated by automation, and improve customer satisfaction through a rewards program to forge long-term relationships, the brokerage noted. The company "has a significant edge in digital transactions by offering cash pick-up services, a capability largely absent among digital-first competitors," according to Oppenheimer.

Analysts modeled transaction growth of 3% and 2% in 2025 and 2026, respectively, but forecast up to 3% annual declines in revenue per transaction amid rising competition. It also estimates a 2% drop in consumer money transfer revenue to $3.07 billion for 2025 and a 1% increase in 2026.

For the consumer services segments, the brokerage estimates a 12% revenue jump to $460 million in 2025. "Starting in 2Q25, growth should accelerate, driven by a seasonally stronger period for Western Union's FX business," due to summer travel in Europe, according to analysts.

The company's recent acquisition of the Eurochange group could add almost 1% to its total revenue growth, the brokerage said. For 2025, analysts expect a 1% decline in adjusted revenue growth to $4.17 billion and a 2% rise to $4.21 billion in 2026. Analysts estimated adjusted EPS to increase 1% to $1.76 in 2025 and 6% to $1.86 in 2026.

Oppenheimer said it initiated coverage of the stock with a perform rating.

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