WPP Beat Q3 Net Revenue Expectations; Mixed 2022 Guidance; Maintaining FVE; Shares Undervalued

WPP reported better-than-expected third-quarter net revenue, like its peers. While its clients face macro uncertainties, they continue to spend on advertising, data analytics, technology, and overall digital transition as their dependency on first-party data increases. WPP updated its full-year guidance and expects organic growth to be at the upper half of its previous guidance, while margins could expand a bit less than previously thought. We did not make any significant changes to our projections and continue to expect deceleration in growth in 2023 given the ongoing macro uncertainty in the U.S. and Europe, partially offset by the firm’s account wins this year. We are maintaining our GBX 1,340 fair value estimate, which represents an attractive 75% upside to where the shares are trading now.