Goldman Sachs gave a lift to WPP PLC (LON:WPP) shares on Wednesday, upgrading its rating for the FTSE 100-listed advertising giant to ‘buy’ from ‘neutral’ after highlighting client wins in May in a review of the European ad sector.
The US bank’s analysts noted that, according to industry reports, WPP won the US$500mln Unilever China media account and other small accounts last month, which was only partly offset by the loss of the US$275mln Clorox US digital media account to US peer Omnicom.
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They pointed out that this places WPP at the top of the advertising league table in May, and in the year-to-date, with wins of 0.1% and 0.9% worth of 2019 revenues, respectively.
The Goldman analysts said: “Overall, we see recent new business performance together with the phasing out of the major Ford account loss as supportive of an improvement in organic growth in 2H2020.”
In mid-morning trading, WPP shares were 1% higher at 643.40p.
Looking at the sector overall, the analysts pointed out that new business activity has remained healthy so far this year despite the coronavirus (COVID-19) crisis with year-to-date new business amounting to US$3.8bn, representing a 23% year-on-year increase.
They noted that activity in the month of May slowed to US$0.64bn, below the rolling 12-month monthly average of US$0.71bn, but was still up 40% year-on-year.
The analysts concluded: “We note that there are currently no large accounts under review, which is not surprising to us given the disruptions related to the COVID-19 crisis.
“We would expect review activity to remain muted in the coming months, which should be a short-term relief for the ad agencies.”