Shares in WPP (LON:WPP) have fallen into the red in today’s session, as analysts at Berenberg turned bearish on the ad giant. Proactive Investors quoted the broker as saying that it expects the group’s situation “to get worse before it gets better”.
As of 13:24 BST, WPP’s share price had lost 2.92 percent to 1,214.00p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.46 percent lower at 7,705.92 points. The group’s shares have lost a little over 30 percent of their value over the past year, as compared with about a 2.4-percent rise in the Footsie.
Berenberg trims stance on WPP
Berenberg lowered its stance on WPP from ‘hold’ to ‘sell’ today, trimming its valuation on the shares from 1,275p to 1,075p. The move comes at a sensitive time for the advertising giant, whose chief executive Martin Sorrell recently stepped down amid an investigation into allegations of ‘personal misconduct’.
Proactive Investors quoted the analysts as explaining that “regardless of the reasons for recent management change, WPP’s Q1 relative performance versus peers (particularly in North America) showed that all is not well from an operational perspective,” which, the broker reckons, “will prove more difficult and costly to fix than consensus expects”.
Berenberg now assumes that full-year 2019 margins will fall another 100bp, and further trimmed its full-year 2019 EPS estimates for WPP by another five percent.
Other analysts on advertising group
The 27 analysts offering 12-month price targets for WPP for the Financial Times have a median target of 1,400.00p on the shares, with a high estimate of 1,940.00p and a low estimate of 1,060.00p. As of June 1, the consensus forecast amongst 29 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.