UBS has kept its 'sell' rating on WPP PLC (LSE:WPP) and told clients it is too early to declare the advertising group's turnaround a success, providing a reality check following the ad giant's interims on Thursday, which propelled shares 25% higher.
The Swiss bank raised its target price to 250p from 210p, which is still well below the current price of 394.6p.
Analyst Jo Barnet-Lamb described the first-half figures as encouraging but said execution risk around the strategic plan remains.
Second-quarter organic growth, which strips out acquisitions and currency moves, came in at minus 2.8%, beating consensus by around 320 basis points and improving sharply on the 6.7% decline in the first quarter.
Roughly 100 basis points of that came from one-offs and easier comparisons, implying an underlying rate closer to minus 3.8%.
UBS has lifted its full-year organic growth forecast to minus 4%, from minus 6%.
The 13% beat on first-half operating profit was also flattered by the phasing of investment, lower severance costs and earlier savings, according to the bank.
Management has guided to second-half margins falling by up to 200 basis points as investment and incentive costs ramp up.
UBS has trimmed its full-year margin forecast to 12.1% and lifted adjusted earnings per share estimates by 1% for 2026 and 2027.
Barnet-Lamb pointed to signs of stabilisation, with China growing 15.6% in the second quarter and performance among the top 25 clients improving to a 3.4% decline from 9.4% in the first quarter.
Autos and healthcare have returned to growth, while consumer goods and technology clients remain under pressure.
WPP expects at least £200 million of cash proceeds from disposals this year, having completed more than 15 non-core sales in the first half.
The shares trade on six times the bank's revised 2026 earnings forecast.
UBS said it would need to see sustained organic growth improvement and tangible margin expansion before turning more positive.
