Company Reports

IPG’s return to growth sputtered a bit during the first quarter, as revenue increased 1.3% versus a 1.7% gain last quarter. Management also indicated that recently lost business—which Ad Age and others have reported includes creative work for Pfizer—will preclude it from hitting the higher end of its 1%-2% organic growth target for the year. Relatively heavy exposure to technology and telecom clients also continues to weigh on IPG. The firm believes this client segment reduced organic growth by about 2.0%-2.5% during 2023 and about 1.5% during the first quarter. Most of the first-quarter drop within the segment was the result of a major client loss in 2023, indicating that spending at individual clients is stabilizing. We are maintaining our fair value estimate at $39.

Interpublic Group is one of the global Big Five advertising holding companies along with Dentsu, Omnicom, Publicis, and WPP. The firm has maintained its market position as it continues to make acquisitions and increases its focus on faster-growing emerging markets and the overall digital ad market. Cost controls have produced consistent operating margin expansion over the past five years, which we expect to continue.

IPG returned to organic growth in the fourth quarter after three consecutive declining quarters as waning economic uncertainty pushed media and project spending higher. While we view the firm’s media, creativity, technology, and data analytics capabilities as similar to its peers, like WPP, its heavier client concentration in technology and telecommunication is pressuring organic growth. We expect demand in this group to improve this year. Better growth, combined with a lower headcount and more efficiency, could result in margin expansion. The narrow-moat IPG continues to trade at a discount to our fair value estimate that we are raising to $39 from $36.

Interpublic Group is one of the global Big Five advertising holding companies along with Dentsu, Omnicom, Publicis, and WPP. The firm has maintained its market position following the COVID-19 pandemic as it continues to make acquisitions and increases its focus on faster-growing emerging markets and the overall digital ad market. The firm has demonstrated consistent operating margin expansion through cost controls during the past five years, which we expect to continue through the next few years.

IPG again missed expectations during the third quarter and lowered its growth guidance for the year, lagging its major rivals. Publicis and Omnicom posted solid organic growth, while Publicis increased its full-year net revenue outlook. IPG’s net revenue declined organically from last year, as the firm’s tech and telecom clients have been cutting spending. The firm’s exposure to those industries is greater than those of Publicis and Omnicom but less than WPP. IPG also lacks seamless integration of its creative offerings with media and data and has had to improve its media buying, which requires some changes to its trading model, both contributing to its weak quarter.

We are maintaining our $36 fair value estimate for Interpublic. The narrow-moat firm’s second-quarter results displayed some strengthening of ad spending in most sectors, which we think is likely to continue in the second half. However, lower spending by clients in technology and telecom pulled back revenue organically in the second quarter. While we expect the weakness in those sectors to continue in the second half, mainly due to cost-control initiatives, it should be offset by further growth in most other sectors. In addition, with the increasing adoption of artificial intelligence, we expect IPG and its peers to provide more consulting and data services, which will further drive growth. Revenue from recent account wins such as Pfizer will also help IPG to return to organic growth in the second half. Given the firm’s weak first half, management reduced its full-year organic growth outlook but maintained its margin guidance. Although the stock is down 11% in midday trading, it remains fairly valued, in our opinion. We continue to view peer WPP as a more attractive investment.

While last year’s organic net revenue growth of 11.5% was tough to match, in our view, IPG reported solid first-quarter 2023 results with only a slight decline in organic net revenue. The firm maintained its full-year organic growth guidance, expecting improvement in the second half, with which we agree as we expect less economic uncertainty during that period. We are not making any significant adjustments to our projections and are maintaining our $36 fair value estimate. While the share price declined 5% in reaction to earnings, it remains fairly valued in our view.

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.

Interpublic Group is one of the global Big Five advertising holding companies along with Dentsu, Omnicom, Publicis, and WPP. The firm has maintained its market position following the COVID-19 pandemic as it continues to make acquisitions and increases its focus on faster-growing emerging markets and the overall digital ad market. The firm has demonstrated consistent operating margin expansion through cost controls during the past five years, which we expect to continue through the next few years.

Interpublic reported better-than-expected third-quarter results as its one-stop shop offering of technology, data analytics, media, and creative continues to attract clients. We expect the macroeconomic environment to slow ad spending. However, its impact on IPG’s top line could be partially offset by continuing strong demand from clients on the technology and data analytics sides and the firm’s ability to prepare its clients for a possible downturn. For example, similar to its peers, IPG can guide clients through the allocation of ad and marketing budgets toward more short-term digital direct-response ad buying. Management increased its full-year organic growth guidance mainly because of the strong third-quarter results. We did not make significant adjustments to our model and are maintaining our $35 fair value estimate. The shares of this narrow-moat firm, which has 3.8% dividend yield at current levels, remain attractive, in our view.

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.

Interpublic posted strong first-quarter results that beat FactSet consensus estimates on the top and bottom lines. Despite various geopolitical and macroeconomic factors, including the war in Ukraine, it reported double-digit organic growth and, as a result, increased its full-year guidance. We remain optimistic about the narrow-moat firm’s ability to hit its latest organic growth outlook as it is well positioned with its one-stop-shop offering, components of which, such as data and technology, may not be as cyclical as traditional media buying. However, we think the shares are currently fairly valued; we recommend peers like WPP and Publicis as they are trading at larger discounts to our fair value estimates.

Interpublic Group is one of the global Big Five advertising holding companies along with Dentsu, Omnicom, Publicis, and WPP. We expect the firm to maintain its market position after the COVID-19 pandemic as it generates competitive organic growth, continues to make acquisitions, and increases focus on faster-growing emerging markets and the overall digital ad market. The firm has demonstrated consistent operating margin expansion through cost controls during the past five years, which we expect to continue through the next few years, highlighting the success of IPG’s turnaround, which began more than 10 years ago.

Interpublic Group reported an in line end to 2021 as third-quarter results met FactSet consensus estimates for revenue and EBITDA. While IPG generated impressive double-digit organic net revenue growth once again, shares dropped by over 7% in morning trading, perhaps reflecting disappointment with management’s 5% 2022 organic revenue growth outlook, well below the 11.9% posted in 2021. We are maintaining our $35 fair value estimate as we expected revenue growth deceleration in 2022 given tougher comparisons this year. Also, IPG’s outlook is similar to that issued by rivals Publicis and Omnicom in recent days. We recommend investors wait for further pullback in the stock before investing in this name. We now view all four ad holding companies under our coverage (WPP, Omnicom, Publicis, and IPG) as fairly valued.

Interpublic Group is one of the global Big Five advertising holding companies along with Dentsu, Omnicom, Publicis, and WPP. We expect the firm to maintain its market position after the COVID-19 pandemic as it generates competitive organic growth, continues to make acquisitions, and increases focus on faster-growing emerging markets and the overall digital ad market. The firm has demonstrated consistent operating margin expansion through cost controls during the past five years, which we expect to continue through the next few years, highlighting the success of IPG’s turnaround, which began more than 10 years ago.

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.

We are increasing our fair value estimate for Interpublic Group to $31 from $29, as the narrow-moat firm has displayed the ability to use its creativity, data, and technology offerings to not only bring in more advertisers but also to convince clients to increase spending. While last year’s pandemic-ridden second quarter created easy comps, this second quarter’s top and bottom lines came in well above our internal projections and FactSet consensus estimates. IPG’s net revenue also represented an impressive high-single-digit organic growth from 2019. Recovery was evident in all regions and in both of business segments. In addition, management raised its full-year guidance. We remain confident that as the economic turnaround continues, more ad spending will follow, further driving revenue growth and creating operating leverage for IPG this year.

Interpublic Group is the fourth-largest player of the Big Five advertising companies (IPG, WPP, Publicis, Omnicom, and Dentsu). We expect the firm to maintain its market position after the COVID-19 pandemic as it generates competitive organic growth, continues to make acquisitions, and increases focus on faster-growing emerging markets and the overall digital ad market. The firm has demonstrated consistent operating margin expansion through cost controls during the past five years, which we expect to continue through the next few years, highlighting the success of IPG’s turnaround, which began more than 10 years ago.

Narrow-moat Interpublic Group reported better-than-expected organic growth in revenue and further margin expansion, as economic recovery amid the pandemic continues to drive more ad spending. The firm issued guidance for organic growth between 5% and 6% and operating margin of 15.5%, which is higher than we had been projecting. We did not make any significant changes to our revenue projection but did widen our margin assumption, which resulted in our fair value estimate increasing to $29 from $28. IPG continues to execute well on all fronts, and while the company is trading at a slight premium to our fair value, its 3.8% dividend yield may be attractive to some investors.

Interpublic Group is the fourth-largest player of the Big Five advertising companies (IPG, WPP, Publicis, Omnicom, and Dentsu). We expect the firm to maintain its market position after the COVID-19 pandemic as it generates competitive organic growth, continues to make acquisitions, and increases focus on faster-growing emerging markets and the overall digital ad market. The firm has demonstrated consistent operating margin expansion through cost controls during the past five years, which we expect to continue through the next few years, highlighting the success of IPG’s turnaround, which began more than 10 years ago.