Berenberg says WPP (LON:WPP) is not out of the woods yet even though the group’s sales beat expectations in the first quarter, WebFG News reports. The comments follow the ad giant’s update earlier this week which marked the company’s first results since the departure of chief executive Martin Sorrell.
WPP’s share price has advanced in London in today’s session, having added 0.75 percent to 1,277.50p as of 4:26 BST. The shares are outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.31 percent higher at 7,543.42 points. The group’s shares have given up just under a quarter of their value over the past year, as compared with about a four-percent gain in the Footsie.
Berenberg sees more problems
Berenberg reaffirmed the ad giant as a ‘hold’ yesterday, valuing the shares at 1,275p. The move came after WPP’s results earlier this week, when the ad giant reaffirmed its guidance for the full year following Sorrell’s departure. WebFG News quoted the analysts as saying that while the market’s positive response was understandable following 12 months in which WPP disappointed investors several times, profit estimates will get worse before they improve.
“WPP is not out of the woods yet, with tougher UK comps to come, a weak US trend likely to continue (the company’s highest-margin region) and management admitting that no assumption has been made for any major client account losses,” Berenberg said in a note to clients.
Other analysts on advertising group
Liberum Capital meanwhile remains bullish on WPP, having reiterated its ‘buy’ rating on the advertising giant this week, with a price target of 1,750p on the shares. According to MarketBeat, the company currently has a consensus ‘hold’ rating and an average price target of 1,509.59p.