Macquarie says drop in WPP shares was an "extreme reaction"
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13:10 24/04/24
Analysts at Macquarie reiterated their 'outperform' recommendation in stock of media advertising agency giant WPP, telling clients the previous day's losses were an "extreme reaction".
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In a nutshell, while 'structural questions' remained, there were no incremental negative news in the company's latest set of interims, they said.
Indeed, they admitted that like others in the market they too were worried about more than just the near-term financials.
However, in their judgement the consensus forecast for a 0.7% increase in organic net sales growth heading into the figures had been too optimistic.
Furthermore, there was "some hope" that consumer packaged goods manufacturers would boost their marketing spend in the second half.
The company also had the ability to control staff and central costs to protect guidance for margin upside.
Macquarie reiterated its 'outperform' recommendation and 1700p target price for the shares.
"Agencies' fees remain under pressure, so the take rate on any new spending or client wins is unknowable. Changes brought by e-commerce and IT will wind through the system over a long period of time, yet agencies remain essential intermediaries and business process outsourcers for marketers."