Citi has given WPP PLC (LSE:WPP) some marginal downgrades due to foreign exchange headwinds and the FGS disposal, but the advertising big cap’s risk/reward profile still “tilts positively”, said analysts.
Although macroeconomic concerns (i.e. historically low global advertising spend) “still loom, Citi said WPP is exiting the third quarter “on a much firmer footing than entered it and than the market might have expected”.
Citi analysts said: “On new business the group has not only successfully defended its position with Unilever – a key overhang for both forecasts and sentiment – but actively taken share with the win of the international media business at Amazon.
“This should support not only forecasts but also the multiple, in our view, as it validates the group's structural position.”
Citi noted that the FGS disposal had a “temporarily dilutive” effect of growth and margins, but it had the benefit of fortifying the balance sheet.
WPP’s results are due on 23 October.