Omnicom: Account Wins and the One-Stop-Shop Difference Will Drive More Growth in 2024

Narrow-moat Omnicom’s third-quarter results demonstrate the firm’s continuing success in interagency collaboration across agency brands, which has made Omnicom a one-stop-shop ad-holding firm and helped it win a few notable accounts. We think the account wins, along with successfully retaining many current accounts and the ad spending growth that we foresee next year will result in Omnicom exceeding our initial 2024 revenue increase projection. We adjusted our model accordingly, resulting in a $98 fair value estimate, up from $95. We view the shares, which are trading at a 21% discount to our fair value estimate, as attractive. Overall, the third-quarter results of Omnicom and Publicis (which reported last week) support our assumption that the advertising space still has room for growth this year and in 2024.