We are maintaining our Neutral recommendation on
Interpublic Group of Companies Inc.
We are optimistic on the company's digital capabilities,
diversified business model and geographic reach that offer
distinctive quality and a competitive advantage to its clients. In
addition, the Group is always on the look out for strategic
investments/acquisitions to expand in high-growth and key world
The company plans to focus on additional debt reduction
opportunities to improve its balance sheet and reduce effective
cost of debt. During the second quarter, the company delivered
above-average organic revenue; managing the costs side effectively.
The results also demonstrated improved labor costs and staff cost
The company is expected to achieve targeted levels in the coming
quarters based on its diversification across emerging regions and
collaboration/integration across agencies. The Group's
best-in-industry talent and tools are expected to offer optimal and
affordable solutions, thus rendering an edge over its peers,
Omnicom Group Inc.
Publicis Groupe SA
However, the company is not free from the risks of a competitive
environment. Agencies and media services compete with other
agencies and creative or media services providers to maintain
existing client relationships and to win new clients. Such keen
competition may depress profits as well. Moreover, constrained
marketing budgets from big clients are anticipated to slow down
Group's international operations are exposed to all kinds of
risks that affect foreign operations. These risks may limit IPG's
ability to grow its business and effectively manage its operations
in foreign shores.
The company depends on a few significant customers for a large
proportion of its revenues. Thus, a loss of any of these key
clients would substantially impact the company's business.
The company holds a Zacks #3 Rank, which translates into a
short-term (1-3 months) Hold rating.
INTERPUBLIC GRP (IPG): Free Stock Analysis
OMNICOM GRP (OMC): Free Stock Analysis Report
PUBLICIS GP-ADR (PUBGY): Free Stock Analysis
WPP PLC (WPPGY): Free Stock Analysis Report
To read this article on Zacks.com click here.