WPP Earnings: As Expected, 2025 Off to Slow Start; Tariffs Present Additional Risks

Narrow-moat-rated WPP reported expectedly weak first-quarter results, with performance still anticipated to improve in the back half of the year. Management made essentially zero changes to its full-year guidance, with the exception of a worsening expected drag from foreign-exchange impacts. However, on a constant currency basis, guidance was maintained. The management team said that it is not seeing any major step-downs in spending by clients yet but admitted that a high degree of uncertainty still remains around tariffs in general. As we update our short-term foreign exchange estimates, we are decreasing our fair value estimate to GBX 670 from GBX 700.