Analyst Note| Ali Mogharabi |
Omnicom reported a better-than-expected third quarter on both the top and bottom line as the year-over-year decline in demand from marketers improved a bit from the second quarter. As was the case with other ad holding companies and digital platforms like Snap, Omnicom clients are showing more interest in direct response ads than brand ones, for the time being. In addition, many are accelerating their digital transformation plans, to which Omnicom has responded well. The firm did not provide fourth-quarter guidance due to the ongoing uncertainty related to the COVID-19 pandemic. We slightly adjusted our model to account for the slightly higher third-quarter revenue but are maintaining our $79 fair value estimate. We continue to view this narrow-moat name favorably for long-term investors.