Analyst: Improved visibility for ad agencies


BarclaysBusiness is improving and visibility is increasing for many multinational corporations. At Barclays Capital analyst Anthony DiClemente thinks that should translate into larger advertising and marketing budgets, which is good news for the big ad agency conglomerates that he covers.

“In our view, the improved macro data points year to date have likely increased visibility for many multinational corporations, which bodes well for potential expansion of advertising and marketing budgets. These cyclical tailwinds, combined with secular tailwinds from emerging markets and digital, lead to our constructive view of the agencies,” DiClemente said in a note to clients on Monday (4/9).

The analyst tweaked his earnings estimates upward for both Interpublic Group (IPG) and Omnicom Group (OMC), but it’s IPG he’s really excited about.

DiClemente has a “1-Overweight” rating on IPG, citing three plusses for the stock: “: 1) the turnaround story is still not over and the company has sustained strong operating momentum recently; 2) margins are still below peer levels; and 3) valuation is attractive as IPG is trading at a significant discount to its historical relative valuation premium.”

The Barclays analyst has a target price of $13.00 for IPG, which closed 4/5 at $10.94. For OMC he has a target price of $50.00, barely above the 4/5 closing price of $49.40.