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Stock Analyst Update

WPP Has Become Relevant Again; Posted Strong Q2 Results

We continue to view this narrow-moat name with a dividend yield of 2.6% as attractive.


WPP’s (WPP) first-half 2021 results easily beat expectations on the top and bottom lines as economic recovery and the firm’s investments in enhancing its digital offerings drove organic revenue growth and margin expansion. While WPP will face more account reviews this year, similar to its peers, we believe it is well positioned to continue gaining net account wins that began in 2020 and continued through the first six months of this year. Management increased its organic growth guidance for 2021, but we are not making significant changes to our model given the near-term uncertainty brought about by the Delta variant. We are maintaining our GBX 1,340 fair value estimate and continue to view this narrow-moat name with a dividend yield of 2.6% as attractive.

Net revenue during the first six months increased 5%, with impressive 11% organic growth more than offsetting the impact of dispositions and foreign exchange headwinds. While the organic growth figure is also attributable to last year’s weak revenue, net revenue was 0.5% above 2019 levels.

Organic growth was strong in all regions with 7.5% in North America, 16.9% in the U.K., 15% in Western Europe and 10.5% in other markets. We were pleased that the creativity, data, and technology combination provided mainly by Ogilvy and GroupM drove organic growth in North America. While growth in North America was only in the high single-digits, organic net revenue was nearly 1% above net revenue in 2019, which we view as positive. In the U.K. and Western Europe, organic net revenue also exceeded 2019 levels. 

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Ali Mogharabi does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.