Buy Stagwell stock for a 60% return in 12 months: Goldman Sachs

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Updated on Sep 27, 2024

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Goldman Sachs assumed coverage of Stagwell Inc today with a "buy" rating.
Analyst Brett Feldman expects continued focus on digital ads to be a tailwind.
Stagwell stock is already up more than 50% versus its year-to-date low.

Shares of Stagwell Inc (NASDAQ: STGW) jumped more than 10% this morning after a Goldman Sachs analyst turned super bullish on the digital marketing company.

Stagwell stock has upside to $12

On Monday, Brett Feldman assumed coverage of the New York based company with a “buy” rating and said its shares could climb to $12 – about a 60% upside versus their previous close.

He’s convinced that continued focus on digital advertising will be a long-term tailwind for Stagwell stock.

We expect [digital advertising] to outpace total advertising spend by LSD through 2026E (ex-US political), as companies continue to shift mix of advertising budgets towards digital mediums.

Note that Stagwell brings in about 60% from its total revenue from digital versus a traditional ad agency at 30% only.

Stagwell has a strong balance sheet

Feldman agreed in his research note that Stagwell lacks a big enough international footprint but said its balance sheet is sufficiently strong to remedy that with mergers and acquisitions.

Strong balance sheet and cash flow provide strategic and financial flexibility. We expect STGW to sustain a robust M&A programme, with an emphasis on expanding its international presence.

The Goldman Sachs analyst expects market share and alongside the multiple on Stagwell stock to expand moving forward. Organically, the Nasdaq-listed firm is growing faster than its traditional peers.

Stagwell Inc is expected to earn 18 cents a share in its current financial quarter versus 8 cents per share a year ago.