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The Interpublic Group of Companies Inc IPG

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Morningstar’s Analysis

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Economic Moat




Interpublic Group Benefited From More Direct Response and Digital Ad Spending in Q3; Raising FVE

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Interpublic Group’s third-quarter results beat our estimates and the FactSet consensus estimates. Like its peer, Publicis, IPG is benefiting from more spending by advertisers as the economy is displaying signs of gradual improvement. However, given the recent surge in COVID-19 cases, the risk of an interruption in the economic recovery remains. We raised our fair value estimate to $26 from $24 as we are now assuming lower decline in revenue for the year. In addition, as demonstrated this quarter, the firm’s restructuring efforts are bearing fruit and we expect IPG to expand margins beyond the historical highs we saw in 2019. The firm’s dividend, which is yielding 5.4%, remains safe. While the stock price increased 4% in reaction to third-quarter results, we continue to view this narrow moat name attractive.

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Company Profile

Business Description

Interpublic Group is the world's fourth- largest ad holding company, based on annual revenue. It provides traditional advertising services along with digital and other services such as public relations through various acquisitions. IPG has made these services available in over 100 countries. The company generates more than 75% of its revenue from developed regions such as the United States and Europe.

909 Third Avenue
New York, NY, 10022
T +1 212 704-1200
Sector Communication Services
Industry Advertising Agencies
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 54,300