- WPP
- 29 April 2024 10:15:17
Source: Sharecast
They also deemed the shares' valuation "overly cheap".
In a research note sent to clients ahead of the group's first quarter results, they estimated that WPP's organic net revenues were set to grow by 2.2% in the first three months of the year.
That was less than the 2.3% as per the VA consensus and their own estimates for 3-5% growth for the full-year.
Hence, revenue growth would need to accelerate over the remainder of the year, but they were not "unduly concerned", although that did ratchet up the relative risk profile "slightly".
"We think the starting point in terms of assumptions is adequately conservative, we note the group's track record of delivering consistent beats vs. expectations (on average this has been c. 200 bps based on 2019-2022) and we acknowledge the improving
comp profile through the year, particularly in China/RoW," they said.
Furthermore, changing hands at 9.1 times the forwards price-to-earnings multiple and with a free cash flow yield of over 10% on offer, the shares were "overly cheap", they said.