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Interpublic Group (IPG) Remains Poised for Modest Growth


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On Aug 26, Zacks Investment Research updated the research report on advertising services provider The Interpublic Group of Companies, Inc.IPG .

NY-based Interpublic is the third largest advertising company in the world. It offers a range of advertising and marketing communication services, as well as marketing services along with public relations, meeting and event production, sports and entertainment marketing, corporate and brand identity, and strategic consulting services to a broad list of customers in more than 100 countries.

Interpublic reported healthy second-quarter 2016 results with GAAP earnings of $156.9 million or $0.38 per share up from $121.2 million or $0.29 per share in the year-earlier quarter. The year-over-year increase in earnings was primarily driven by top-line growth. Adjusted income came in at $134.5 million or $0.33 per share. Adjusted earnings for second-quarter 2016 were in line with the Zacks Consensus Estimate.

Interpublic expects to strengthen its position with respect to new business activities as well as opportunities from existing and new clients. Its impressive results were driven by revenue growth as well as successful cost streamlining initiatives. The company expects growth momentum to continue, as its leverages new business wins to improve its growth outlook. The improving position of the agencies, whether in PR, healthcare communications, sports and entertainment, or interactive marketing, gain industry recognition on a continuous basis, which augurs well for its long-term growth.

Interpublic's digital capabilities, diversified business model and geographic reach offer a distinctive competitive advantage to its clients. The company is expected to achieve targeted levels in the coming quarters based on diversification across emerging regions and collaboration/integration across agencies through technological improvement. Moreover, the company continues to look for strategic investments/acquisitions to expand in high-growth regions and key world markets.

However, Interpublic derives a major portion of its revenues from outside the U.S. This exposes the company to foreign currency translation impacts particularly after the Brexit, posing a threat to its growth. The company is likely to be stifled by the renegotiated deals and restrictions imposed on trade with other European Union members. Brexit could further result in higher tariff and non-tariff barriers to trade between the U.K. and the European Union, lowering productivity of the company. In addition, the company also faces other risks like local legislation, monetary devaluation, exchange control restrictions and unstable political conditions, which may hamper revenue growth and impact its financial position.

Interpublic currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Marin Software Incorporated MRIN , Avis Budget Group, Inc. CAR and RPX Corporation RPXC , each carrying a Zacks Rank #2 (Buy).

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AVIS BUDGET GRP (CAR): Free Stock Analysis Report

INTERPUBLIC GRP (IPG): Free Stock Analysis Report

RPX CORP (RPXC): Free Stock Analysis Report

MARIN SOFTWARE (MRIN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: CAR , IPG , MRIN



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