WPP’s share price bounces

WPP’s share price was up on Tuesday as the FTSE 100 bounced from lows in line with Wall Street.

The advertising agency, led by Sir Martin Sorrell, gained 5.5% to 340.5p after Goldman Sachs said its valuation had reached record lows, according to reports in the Financial Times.

WPP shares have been hit in recent weeks by concerns about its exposure to emerging markets, doubts over the health of its biggest client Ford and following its acquisition of the market research company TNS (see WPP Takeover Of TNS Expected To Be Confirmed Today).

Based on Goldman’s 2009 profit forecasts, WPP stock had reached a 10% discount to its French rival Publicis and a 15% discount to the market.

A broker said: “We believe the stock will re-rate when the limited further downside risk to earnings forecasts is recognised.”

Last month, WPP was forced to admit that the financial crisis has hit its UK and US businesses after it reported low Q3 results.

The communications group saw a 3% year on year revenue increase in the third quarter to £1.72 billion (see WPP Reveals Low Q3 Results).

At the time, WPP said that “like-for-like growth across the [third] quarter was similar in all three months, although below original expectations”.

WPP also said that a number of targets were under pressure but said they would do everything to try and achieve their operating margin target of 15.5% for 2008, though it “will not be easy”.

Sir Martin Sorrell, who heads up the world’s second largest marketing services group, said he expects 2009 to be a tough year, with no real recovery until 2010 (see Sorrell Predicts Difficult 15 Months For UK Economy).

WPP: 020 7408 2204 www.wpp.com