WPP forecasts downgraded

WPP reported UK revenues up 4.7% on the year to £311 million for Q3 2012, helped by its advertising business. However, full year forecasts have been downgraded.

WPP reported overall revenues up 1.6% to just under £2.5 billion. The revised full year outlook for 2012 is for growth between 2.5% and 3% against a higher 3.5% forecast made in August.

Bank of America Merrill Lynch (BoAML) analyst report published today believes organic growth slowed from 3% in July to 0% in September.

The bank stated that the UK results benefitted from the Olympics but North America remained weak. Advertising & Media Investment Management continued to outperform, up 2.9%, albeit slower than Q2 (5.9%). Consumer Insight remained stable at 0.8% while PR & Public Affairs deteriorated, particularly in the US, down 1.7% versus +1% in the first half of 2012.

WPP were not over optimistic about 2013. A company statement said: “In addition to the continuing slowdown, a further cloud on the horizon may be 2013. There will be no maxi or mini-quadrennial events in the year.”

BoAML have left there 2013 forecast at +1.4% but believe the company’s control of costs and maintenance of its margin will help its deliver for shareholders. The bank now recommends the stock as a buy with a price target of £10 per share (currently around £8).