WPP: Oddo still a buyer
(CercleFinance.com) - Oddo analysts this morning questioned the risk of a "scissor effect" for advertising agencies in 2022.
This means a slowdown in organic growth, alongside an increase in costs - particularly salary costs.
They say that this would lead to a lower increase in the group's operating margin and lower EPS growth than currently expected by consensus (+11% on average). As such, the sector's organic growth could be around zero and not +3% as expected.
For the time being, Oddo remains selective in the sector, reiterating its Outperform rating on WPP shares with a target price of 1,200p, with the group having potential for higher EPS growth in 2022 and 2023.
Based on VisibleAlpha data, analysts note that the consensus currently expects Publicis post EPS growth of 5.5%, with WPP announcing 17.7% growth, meaning an average of 11%.
WPP shares are up just over 1% at present, while Publicis shares are down almost 0.5%.
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