WPP Posted Mixed Q4 Results, but Guided to Slightly Above Our Projections; Shares Now Undervalued

WPP reported mixed fourth-quarter results with net revenue slightly missing FactSet consensus estimates while margin expansion helped the bottom line exceed expectations. Double-digit organic growth during the quarter was driven by the economic turnaround, account wins and retention, and the firm’s investments in data and technology, while efficiency improved in all business segments and regions. We continue to believe the resurgence in brand advertising will help drive organic growth for WPP and its peers, while WPP’s investments in digital, data, and creativity will attract large clients as it did with the Coca-Cola win in late 2021. We did not make significant changes to our model and are maintaining our GBX 1,340 fair value estimate for WPP. We continue to view this narrow-moat stock as one of the most attractive among ad holding firms. With the recent decline in the stock price, WPP is again trading in 4-star territory.