On Jan 15, 2014, we have reaffirmed our long-term Neutral
The Interpublic Group of Companies, Inc
). We believe the company will have high growth potential in the
future based on its diversified business and geographical
presence. Moreover, the company's strict cost-control strategy,
technological collaboration across agencies, and investment in
new businesses, look impressive. The Group's best-in-industry
talent and tools, cost management techniques and strong liquidity
position are expected to render it an edge over its peers.
However, concentration risks and foreign operational hazards
could substantially affect the Group's performance in the
upcoming quarters and force us to be on the sidelines.
CLEAR CHANL OUT (CCO): Free Stock Analysis
HURON CONSLT GP (HURN): Free Stock Analysis
INTERPUBLIC GRP (IPG): Free Stock Analysis
WPP PLC (WPPGY): Free Stock Analysis Report
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Interpublic expects to strengthen its position with respect to
new business activities as well as opportunities from the
existing and new clients. The new business wins will improve its
growth outlook and increase margins in the upcoming year. The
strong financials, improving position of the ad agencies and
focus on cost management bodes well for the company's long-term
Interpublic aims to boost its top-line performance with
consistent focus on organic and inorganic growth. The company
continues to look for strategic investments/acquisitions to
expand in high-growth and key world markets. It also aims
to return significant cash to shareholders through share
repurchases and dividend payouts. Moreover, its commitment toward
controlling costs is likely to fuel further growth in the coming
However, the company forms a part of the communications industry
which is highly competitive in nature. We note that the agencies
and media services compete with other agencies and the creative
or media services providers maintain existing client
relationships and win new clients. Also, keeping in view the
service-oriented nature of the whole industry, it becomes
imperative for the company to increase the count of talented
employees while retaining the existing ones.
Although the company is the third largest advertising company in
the world, it faces concentration risks as it depends on a few
significant customers for a large proportion of its revenues
Consequently, over the last 30 days, the Zacks Consensus Estimate
for 2013 and 2014 has remained constant at 82 cents and $1.04 per
Other Stocks to Consider
Interpublic currently has a Zacks Rank #4 (Sell). Other stocks
that look promising in the industry include
Clear Channel Outdoor Holdings Inc.
) and Huron Consulting Group Inc. (
), both carrying a Zacks Rank #2 (Buy).