Shares in advertising giant WPP (WPP) gain 7.1% to £12.30 as first quarter performance is better than expected in the first update since the departure of chief executive and founder Martin Sorrell.
A drop in like-for-like revenue of 0.1% compares with analysts’ expectations for a 1% decline or worse. It is also a big improvement on a 1.2% fall for January.
This still represents the worst first quarter showing in nearly a decade after a very difficult 2017. In summary, Latin America and Asia Pacific did really well, the UK did OK and North America underperformed.
As AJ Bell investment director Russ Mould observes there was no real clarity in the release on where the business goes next, and whether this will involve asset sales or more dramatic changes.
However there are press reports it is considering a sale of its market research arm.
‘There was very little detail on future strategic plans for the business under newly installed joint chief operating officers Mark Read and Andrew Scott. This may have to wait until the company posts its first half results in August.’
Commenting on the topic of Sorrell, AJ Bell’s Russ Mould adds: ‘The reaction to today's first quarter update from WPP suggests the departure of Martin Sorrell may be helping sentiment towards the advertising giant.
MOVING ON
‘Without getting into the ins and outs of his exit the issue of his succession was one the company was going to have to confront sooner rather than later and now this lingering uncertainty has been addressed.’
Liberum analyst Ian Whittaker reiterates his ‘buy’ recommendation and £17.50 price target. He says: ‘WPP’s first quarter trading update was better than expected with net sales down 0.1% organically versus expectations of -0.9% and comments on the crucial Media part suggesting it continues to trade “well”.
‘Together with the press reports that WPP is looking to sell its Market Research assets, the numbers should help the shares and start to close the 30% underperformance year-to-date against the best performing Agency group Interpublic.’
