Interpublic Group Posted Another Strong Quarter, Advertising Demand Intact; Shares Attractive

Interpublic Group’s second-quarter results, which beat the FactSet consensus on the top line and met expectations on the bottom line, demonstrated continuing strength in demand for ad spending, data analytics, and digital transformation, like its peers including Omnicom and Publicis. The diversification of the firm's offerings during the last few years is bearing fruit as, in our view, its business has become a bit less cyclical, allowing it to better weather economic uncertainties. Given the strong net revenue growth in the second quarter, management increased its full-year organic growth guidance, despite its continuing expectation of a slowdown in the second half due to tougher comps and macroeconomic uncertainties. We made only minor adjustments to our model and are maintaining our $35 fair value estimate, which represents an attractive 19% upside from current levels for this narrow-moat name that also has a 3.7% dividend yield.