Hargreaves Lansdown reckons that while WPP’s (LON:WPP) new CEO’s plans make sense, the business is still facing some major challenges. The comments came after the advertising giant updated investors on its half-year performance on Friday.
WPP’s share price has been steady in London this morning, following yesterday’s rise, and was up 0.33 percent to 984.20p as of 09:19 BST, outperforming the FTSE 100 index which trades marginally lower. The group’s shares have given up just under a fifth of their value over the past year, as compared with about a five-percent fall in the Footsie.
HL weighs in on WPP
George Salmon at Hargreaves Lansdown commented in a note last week that while WPP’s half-year net revenue was still down on the prior-year period, the group’s latest results showed that the rate of decline in the group’s crucial North American market had moderated in the most recent quarter.
“We think [CEO Mark Read’s] turnaround plans make sense, but we also think there are some major challenges around,” the analyst pointed out, elaborating that the top line remained in decline, and that the group needed “to navigate an advertising market that’s increasingly dominated by the likes of Facebook and Google”.
“WPP is expected to hold the dividend in the next few years, and the prospective yield is around 6.5%. That’s an attraction, especially since there could be further returns to shareholders following the Kantar sale,” the analyst continued, adding, however, that the broker needed to see “more signs of progress before we can become confident the group can sustain or grow that payment longer term”.
Other analysts on ad giant
The 22 analysts offering 12-month targets for the WPP share price for the Financial Times have a median target of 1,025.00p, with a high estimate of 1,520.00p and a low estimate of 800.00p. As of August 10, the consensus forecast amongst 26 polled investment analysts covering the FTSE 100 group has it that the company will outperform the market.