Multinational advertising giant WPP PLC (LSE:WPP)’s second-quarter results are due on 7 August, with analysts pinning hopes on signs of recovery following a dour 12 months.
Advertising spend has been a net loser amid the global inflation cycle, but with cost pressures coming down and interest rates soon to follow, WPP could soon be seeing green shoots.
Citi expects to see negative growth in the results, although the overall trend should be one of improvement from the first quarter before returning to growth in the third.
“While further progress on revenue would be helpful, what we think is really needed is a conspicuous sign that the group's turnaround plan is working (or, failing that, a concrete sign that the group's assets are undervalued),” said Citi.
Regarding WPP’s current valuation, Citi sees the stock trading at a “material discount to peers” at eight times forward price to earnings compared to 10-13 times across the wider industry.
“We do think investors are compensated for this uncertainty but acknowledge the need for patience,” analysts added.
The stock is currently swapping for 743p.