Proactive Investors - Shore Capital Markets has reiterated its buy rating on WPP PLC (LON:WPP) ahead of the advertising giant's upcoming third-quarter trading update on 23 October.
Analysts suggested that investors will be looking for reassurance following WPP’s interim results, which saw the company reduce its full-year revenue guidance from flat to slightly less than flat.
WPP, along with the broader advertising industry, is facing macroeconomic pressures and a sharp decline in corporate marketing spend.
WPP’s revenue performance this year undoubtedly has been disappointing compared to its peers such as Omnicom and Publicis reporting strong growth in their third-quarter results, but Shore Cap highlighted several positive developments, including WPP’s retention of major accounts like Unilever (LON:ULVR) in key markets and new business wins with Amazon (NASDAQ:AMZN) and Starbucks (NASDAQ:SBUX).
Shore Cap has adjusted its financial forecasts for WPP, lowering its current-year adjusted earnings per share (EPS) estimate by 4%, with further reductions of 7% and 5% for fiscal years 2025 and 2026, respectively.
Despite this, the broker maintains its buy recommendation, citing WPP's strong cash flow and financial position, which will be further bolstered by the expected sale of its majority stake in FSG Global by the end of the year.
"Although WPP’s recent trading performance has been somewhat underwhelming, it remains a leading global player with a deep skill set, broad offering and an enviable blue-chip client base. We believe that these factors mean that it should be well-placed to capitalise on medium-term growth in advertising / marketing spend," Shore Cap said in its report.