Shares in S4 Capital PLC (LSE:SFOR) were unmoved by what on the face of it was an encouraging update from the digital advertising group as it confirmed that its fourth-quarter 2022 trading was in line with expectations.
As a result, the company, which was founded by chairman and ad industry veteran Sir Martin Sorrell, anticipates delivering at least £120mln of underlying earnings (EBITDA) for the full year 2022.
In a statement, S4 Capital said that it significantly improved its operational EBITDA margin performance in the second half of the year, with like-for-like gross profit/net revenue growth also in line with its 25% guidance.
The company also expects its net debt to be well towards the lower end of the guided range of £130-£170mln, thanks to improved liquidity.
Sorrell informed investors that the company's expectations are to surpass the projections of most market commentators for digital advertising growth, which is expected to be in high single digits.
He believes that the company can continue to excel in these areas because of its addressable markets in technology services and their progress with clients.
Sorrell also noted that the priorities for 2023 for clients are to increase revenue growth by focusing on the lower stages of the sales funnel and activating them, as well as reducing costs through digital marketing transformation.
In late morning trade, the stock was static at 218.4p, valuing the business at £1.25bn.
Of the nine analysts logged by Proactive as following S4, eight are positive on the stocks. The consensus price target is 281p, a 22% premium to the current share price.