We continue to uphold our Neutral view on
Omnicom Group Inc.
We are still optimistic about the company's strong operational
performance in the UK and US market as well as across Asia and
Latin America. This, we believe, will be reflected in the upcoming
quarter results. We expect auto, food and beverage, retail and
technology businesses, alongside sports media and entertainment to
work as a key factor to augment such growth.
The recent demand upsize for media services, speedy growth of
technologies and massive proliferation of channels are likely to
encourage the company's future growth. Leveraging this opportunity,
the Company's state-of-the-art digital solutions will access the
current information in the market.
Omnicom concentrates on acquisition of complementary companies,
which are expected to heighten the company's digital capabilities,
thereby expanding its client base. Additionally, the company's
balance sheet looks sound enough to stimulate further acquisitions
and investments in the near future.
Omnicom, one of the largest advertising, marketing and corporate
communications companies in the world, continue to offer
cost-effective marketing services in the field of advertising and
marketing communications. These are further expected to ameliorate
the margins in fiscal 2012. Such features boost investors'
confidence on the company above its peers, such as
The Interpublic Group of Companies Inc.
Publicis Groupe SA
However, the flipside scenario remains a matter of concern.
Omnicom functions in an extremely competitive environment, which
requires exclusive service offerings to attract customers while
retaining existing associations. This involves huge cost, thus
Furthermore, there always remains a risk of relying on big
clients as the company may face difficulties with customer spending
cuts. The current cost inflation pressurizing price structure
cannot also be overlooked.
The company is highly exposed to the risk of foreign exchange
barriers and uncertainty from monetary devaluation. Also, the
current cost inflation worldwide is continuously burdening the
price structure of the Company and affecting its margins.
Omnicom 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
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