19th January 2015
Brokers are putting their cash behind advertising and public relations giant WPP as its shares continue to rally.
The FTSE 100 constituent is typically regarded as the bellwether of the advertising industry and therefore something of a global economic barometer.
The past three months alone have seen the firm’s shares rise by 21% while the present analyst consensus has the stock in ‘strong buy’ territory.
For his part Graham Spooner, investment research analyst at The Share Centre, is recommending WPP as a ‘buy’ for long term investors with a balanced portfolio.
He says: “The company offers a wide range of exposure to both digital media and global markets, and has seen its share price rally since October. The growing importance of emerging markets and digital media to the company looks set to continue, allied to improving dividends, earnings momentum and a steady flow of acquisitions.”
Despite a trading update in October, which cautioned that clients remained cautious over the group’s advertising spend, like for like sales rose by 3% in the third quarter.
But the recent strength in the dollar in conjunction with the weakness of the pound could see the group’s earnings receive a boost in 2015 asserts Spooner.
He says: “New technology should help open up avenues for growth for the group over the longer term. This is reflected in new media related business becoming WPP’s fastest growing area. Currently the shares trade on around 14.6 times 2015 forecast earnings, which does not appear overly expensive.”