Omnicom's Q3 Results Display Growing Demand for Ad Holding Firms' Services; Raising FVE to $90

Omnicom reported mixed third-quarter results as revenue slightly missed the FactSet consensus estimates while the firm beat bottom-line expectations. With strong double-digit organic revenue growth, the revenue miss was mainly due to Omnicom’s disposition of ICON in June. The firm saw strong demand for all of its services including media, creativity, digital marketing, and digital and brand consulting. In our view, the macro environment remains accommodative for Omnicom and its peers within the overall advertising space, as the well-known agency brands have come to the forefront again. After including third-quarter results in our model, we have increased our fair value estimate to $90 per share from $89. We continue to view narrow-moat- and 4-star-rated Omnicom as an attractive investment, especially with a 3%-plus dividend yield at current price levels.