WPP shares have dropped by a third since March, not helped by problems afflicting S4, the vehicle set up by Martin Sorrell the ad group’s founder and former chief executive.
UBS says that comparison is unfair on WPP due to S4 Capital's high exposure to technology clients, which accounts for approximately 44% of its client base.
Content production is also a much higher proportion of S4’s revenues.
Even so, WPP will have questions to answer in Thursday’s third-quarter update.
Hargreaves Lansdown reminds us that WPP has already downgraded its growth targets for the full year and net revenue growth is already forecast to come in as low as 1.5%.
“Longer-term, its razor-sharp digital focus should hold it in good stead, but shareholders may have to brace for a bit more turbulence in the months to come.”