Omnicom Reported Strong Q2 Results With Rebound in Ad Spending; Raising FVE to $89

We are increasing our fair value estimate of Omnicom to $89 from $85 as the firm reported strong second-quarter results with the top- and bottom-lines coming in higher than FactSet consensus estimates due to the recovery from the pandemic, which was accompanied by better-than-expected return to ad spending. Revenue growth was driven by a strong rebound in demand for all services provided by the firm in all regions. In addition, management remained confident that growth will continue throughout 2021, although decelerating in the second half. The firm also expects some margin improvement for the year. While Omnicom posted solid results, reports stating that the NFL will take some of its media ad-spending in-house pushed the stock down 4%. If true, we do not expect such a move by the NFL to significantly impact Omnicom’s revenue, nor do we see the risk that other advertisers will follow and bring things in-house increasing.