Morgan Stanley has given a lift to WPP group PLC (LON:WPP), upgrading its rating on the under-pressure advertising giant to ‘overweight’ for the first time since 2012.
In a note to clients, the US broker’s analysts raised their rating from ‘equal-weight’ after upping their target price for shares WPP to 1,975p from 1,900p.
They pointed out: “The market was shocked when WPP announced it will produce just 2% net sales growth in 2017 ( it had expected 3% growth) at its FY figures in March.
“WPP has lost 10% of its valuation since then and is now down 7% ytd. It has underperformed all its global agency peers ytd.”
But the analysts said that after taking a detailed look at the structural challenges facing advertising agencies they have concluded that WPP’s underlying business model “is robust”.
They added: “We think the risk is on the upside as it would be unusual against a positive economic backdrop and with US$6.75bn of new business won in 2016 for WPP to print negative monthly numbers.”
In early morning trading, WPP shares were 0.8%, or 13p higher at 1,728p.