Analyst Note| Ali Mogharabi |
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.