WPP Shares Attractive After Price Slide, say Analysts

While WPP shares declined significantly after the third quarter results, Morningstar analysts believe the stock’s potential upside is appealing to investors

Ali Mogharabi 26 October, 2018 | 9:15AM
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WPP Shares Have Fallen

Shares in advertising giant WPP (WPP) slumped on Thursday after it reported a very disappointing third-quarter revenue update. Recent account losses and lack of more aggressive talent recruitment is costing the firm organic growth, unlike its peers such as Omnicom, Publicis, and IPG. The turnaround that we expected to take place in 2019 appears to be delayed. The firm lowered its 2018 organic growth and operating margin guidance for the year.

Accordingly, we lowered our projections for 2018 and 2019 and now do not expect much indication of a return to growth until late 2019 or in 2020, due to account losses this year and the firm’s necessary additional investment in technology and talent on the creativity front. We must note that net revenue to be generated from new account wins during the first three quarters exceeded those lost, which may indicate that a recovery for the firm is in the making.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
WPP PLC990.20 GBX0.41Rating

About Author

Ali Mogharabi  is an equity analyst for Morningstar