The Zacks Analyst Blog features Interpublic Group, Omnicom Group, WPP, AdTheorent Holding and Stagwell
For Immediate Release
Chicago, IL – March 7, 2023 – Zacks.com announces the list of stocks featured in the analyst blog. Every day, Zacks Equity Research analysts discuss the latest news and events affecting stocks and the financial markets. Stocks recently featured on the blog include: The Interpublic Group of Companies Inc. IPG, Omnicom Group Inc. OMC, WPP plc WPP, AdTheorent Holding Co. Inc. ADTH and Stagwell Inc. STGW.
Here are the highlights from Monday’s analyst blog:
Ad spend likely to stay stable in 2023: 5 tips
The US economy has rebounded impressively from pandemic-related setbacks, bolstered by unprecedented fiscal and monetary support. However, the complete devastation of the global supply chain system and rock-solid demand, supported by government stimulus, resulted in both cost-push and demand-push inflation. The inflation rate hit a 40-year high in June 2022.
As a result, the Fed hiked interest rates by a massive 4.25% in 2022. Market participants were anticipating a maximum rate hike of 75 basis points in 2023. However, January saw an unexpected rise in the inflation rate after three straight months of decline, and a number of strong economic data have raised concerns that the Fed will continue its rigorous rate-hiking streak.
A large proportion of economists and financial experts have warned of a possible recession in 2023. Several US corporate giants have already shed a large portion of the workforce, particularly in the high-income segment. Overall gains for the broad market S&P 500 index are expected to decline 9% year over year in the first quarter of 2023, after falling 5.6% year over year in the fourth quarter of 2022.
Despite the headwinds mentioned above, several market research agencies forecast that advertising and marketing spending is likely to remain stable in 2023. As such, it should be wise to invest in stocks with a favorable Zacks rank in this industry.
Ad spend remains solid
On December 8, 2022, Forbes reported that ad spending in the United States and globally is expected to grow year over year in 2023. However, the rate of increase will be modest compared to the past two years.
Magna Global expects US adspend to grow 3.7% in 2023, compared to an estimated 8% in 2022. Forrester forecasts US adspends to grow 4.6% in 2023, compared to an estimated 10.2% in 2022. Zenith expects US adspend to grow by $66 billion from 2022 to 2025. The US market will account for nearly 44% of the global adspend market size.
BIA Advisory Services estimates that the US advertising market will be worth around $165.7 billion in 2023. The absolute number remains solid despite a 0.5% year-on-year decline. Finally, Statista predicts that US digital advertising spending will grow 13.9% year over year to $297.4 billion in 2023.
Our top picks
We’ve narrowed our search to five advertising and marketing stocks that have strong growth potential going into 2023. These stocks have seen positive revisions to earnings estimates over the past 30 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the full list of today’s Zacks #1 Rank stocks can be found here.
The Interpublic Group of Companies Inc.The digital capabilities, diverse workforce and geographic reach of provide a distinct competitive advantage. IPG has acquired and invested in companies worldwide to expand its product portfolio and adapt to rapidly changing marketing services and media prospects. IPG has sufficient cash to pay off its current debt. Steady dividend payments and share buybacks should boost investor confidence.
The Zacks Rank #1 The Interpublic Group of Companies expects an earnings growth rate of 2.2% for the current year. The Zacks consensus estimate for the year to date is up 2.6% over the past 30 days.
Omnicom Group Inc. remains focused on its internal development initiatives. Consistency and diversity of operations and an increased focus on delivering consumer-centric strategic business solutions ensure continued profitability.
Bottom line, OMC benefits from ongoing operational efficiency initiatives in real estate, back office services, procurement and IT. Changes in OMC’s business mix resulting from divestments of some non-core or underperforming agencies have supported the bottom line.
The Zacks Rank #1 Omnicom Group has an expected earnings growth rate of 3.2% for the year to date. The Zacks consensus estimate for the year to date is up 10.9% over the past 30 days.
WPP AG is a creative transformation company providing communications, experience, commerce and technology services worldwide. WPP operates through three segments: Global Integrated Agencies, Public Relations and Specialized Agencies.
WPP plans and creates marketing and branding campaigns, designs and produces advertisements in various media, and provides media buying services. WPP also offers public relations consulting services for clients wishing to communicate with a range of stakeholders, from consumers to governments to the business and financial communities, as well as specialized agency services.
The Zacks Rank #2 WPP has an expected earnings growth rate of 2.5% for the year to date. The Zacks consensus estimate for the year to date is up 3.3% over the past 30 days.
AdTheorent Holding Co. Inc. is a programmatic digital advertising company that uses advanced machine learning technologies and privacy solutions to create measurable value for advertisers and marketers in the United States and Canada.
ADTH provides predictive targeting, geo-intelligence and cross-environment mapping solutions and Studio AT. ADTH serves the pharmaceutical/healthcare, hospitality, retail, travel and hospitality, banking, financial services and insurance industries.
The Zacks Rank #2 AdTheorent has an expected earnings growth rate of more than 100% for the current year. The Zacks consensus estimate for the year to date is up 62.5% over the past seven days.
Stagwell Inc. provides digital transformation, performance media and data, consumer insights and strategy, and creativity and communication services. STGW operates in three segments: Integrated Agency Network, Media Network and Communication Network. STGW’s brand encompasses digital transformation and marketing, research and insights, marketing communications, and content and media.
The Zacks Rank #2 Stagwell has an expected earnings growth rate of 51.9% for the next year. The Zacks Consensus estimate for next year’s earnings has improved by 68.5% over the last 30 days.
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Omnicom Group Inc. (OMC): Free Stock Research Report
Interpublic Group of Companies, Inc. (The) (IPG): Free Stock Research Report
WPP PLC (WPP): Free Stock Research Report
Stagwell Inc. (STGW): Free Stock Research Report
AdTheorent Holding Company, Inc. (ADTH): Free Stock Research Report
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