Interpublic Group Posts Strong Q4 Results but Cautious About 2023 Growth; Shares Fairly Valued

Like its peers, Interpublic Group posted solid fourth-quarter revenue growth and expanding margins thanks to strong demand for media, creativity, digital, and data services. However, guidance indicates that its clients may be growing cautious regarding ad spending and other investments in 2023. While the firm’s revenue growth outlook was slightly below our projection, we commend it for continuing its investments in growth and taking steps to increase cost efficiency. In addition, we applaud the board’s decision to boost its share repurchase program and increase the quarterly dividend. We have lowered our top-line projections and increased our margin assumptions, resulting in a $36 fair value estimate, up from $35. While the firm’s stock price is down mainly in reaction to guidance, it is still in 3-star territory.