UBS is sticking with a 'Sell' rating on WPP PLC (LSE:WPP) despite Tuesday's better-than-expected first-quarter update, with the Swiss bank arguing that the advertising group’s near-term recovery story still lacks a catalyst.
The broker left its 12-month price target unchanged at 210p, versus a share price of 259p in the note, implying 18.8% forecast price downside before dividends. Including a projected 5.9% dividend yield, UBS sees a forecast stock return of -12.9%.
WPP’s first quarter was better than feared. Organic growth came in at -6.7%, ahead of consensus expectations for -7.8%, while management pointed to early progress under the Elevate28 plan and reaffirmed guidance for H1 like-for-like net revenue to fall by a mid-to-high single-digit percentage. Still, UBS said the improvement is unlikely to carry into the second quarter.
“Q2 trends are expected to be broadly similar to Q1, with a continued drag from net new business,” the broker said.
The broker said WPP’s valuation “does not look demanding” at 5.1 times revised 2026 earnings and a 5.9% dividend yield. But that was not enough to shift the investment case.
“But we see limited near-term catalysts,” UBS said.
Sentiment could improve at the half-year results, where the chief executive is expected to give more detail on Elevate28 progress, particularly if WPP can show positive developments around asset disposals.