IPG Posts Impressive Q3 Results and Provides Higher 2021 Guidance; Increasing FVE to $35

Interpublic Group reported strong third-quarter results that beat top- and bottom-line FactSet consensus estimates. IPG generated impressive double-digit organic net revenue growth during the quarter due to higher demand from all verticals, mainly healthcare, the one-stop-shop offering of creativity, technology, and data analytics, and the better macroeconomic environment. The firm’s net revenue also easily surpassed 2019 levels. As a result, management increased its 2021 full-year organic net revenue growth and margin guidance. We adjusted our projections higher due to the third-quarter results, which also displayed the firm’s ability to operate more efficiently in the long run. However, on the revenue side, we do expect deceleration in 2022 given the firm’s higher comps. Our adjustments resulted in a $35 fair value estimate, up from $31. We recommend investors wait for further pullback in the stock (down 4% currently) before investing in this name. We continue to view WPP and Omnicom as more attractive ad holding companies for investors.