Analyst Note| Ali Mogharabi |
WPP’s first-quarter revenue update provided an early indicator of a successful turnaround for the firm. Organic net revenue increased in all regions. While weakness in ad spending within certain verticals remained, account wins and the overall recovery in advertising demand drove growth. WPP also took another step in demonstrating its data analytics and overall digital transformation capabilities as it announced the creation of Choreograph, the firm’s global data company, built from within. Management maintained its full-year margin and revenue guidance. With surprisingly strong revenue in the quarter, though, management believes it can come in at the higher end of the 3%-7% forecast organic growth range. We are maintaining our GBX 1,340 fair value estimate. We continue to view narrow-moat WPP as the most attractive advertising holding company as the stock is trading at a 28% discount to our fair value estimate. At current levels, the firm’s dividend yield is also around 2.5%.