WPP returns to sales growth

WPP returns to sales growth as new strategy reaps rewards

  • Sales £3.29 billion +5.2%
  • LFL revenue climbed 1.9% (excluding Kantar)
  • US biggest source revenue £1.24 billion +3.8%
  • UK revenue £468 million +1.48%
  • Europe revenue £613 million +4.1%
New strategy takes hold

WPP has had a tough few years. Shares shed 50% of their value from 2017 – 19 as WPP lost big clients such a Ford and American Express and as big ad agencies suffer from stiff competition from the likes of Google and Facebook. Add into the mix the fact that marketing budgets are being hit by ongoing global growth uncertainties and today’s return to quarterly organic sales growth for the first time in over a year looks all the more impressive.

A new strategy and more streamlined approach from boss Mark Read is clearly helping the advertising giant attract talent and win contracts, picking up clients such as eBay and Mondelez. 

An air of caution remains

It is still early days, let’s not forget that WPP had a less than impressive H1. It appears that WPP is on the right path, however it remains cautious in its 2019 outlook, deciding not to move up guidance at this stage. Expectations for 2020 could be a good deal higher. There are tentative signs that WPP is following in the footsteps of it stronger performing US peers, rather than French rival Publicis which slashed its sales outlook earlier this month.

Sentiment towards WPP is on the up. According to data from Refintiv, 24 recommendations are split:
  • 3 Strong buy
  • 8 Buy
  • 10 Hold
  • 3 Sell
WPP levels to watch

WPP traded between 800p – 900p for the first 4 months on the year. In April the share price started advancing, hitting a high of 1047p mid-September. Following today’s results, the share price has jumped over 5% pushing back over the 200 sma. We are looking for a break above 1017p to confirm a more bullish trend. Support can be seen at 930p prior to 900p.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.