WPP plc – American Depositary Shares each representing five Ordinary Shares (NASDAQ:WPPGY) shares are downgraded from Buy to a Hold rating by S&P Capital IQ analysts Caren Siew Teng Ngo and Snyder. The stock suffered a loss of about 2.31 percent on Monday’s regular trading session.
However, the brokerage maintained its one-year price target of $124 on WPP plc. This will reflect 16.3X analysts’ earnings per ADS view for year 2017. The lead analyst cited that this multiple is more than the three-year forward average PE at 15.5X and peers at 15.7X. The analyst also cited the balancing of company’s increased margin levels with its increased leverage.
Ngo and Snyder boosted their 2017 EPS per ADS view by 32 cents a share to $7.63 and established 2018 EPS per ADS estimate at $8.24. The move came on the back of WPP’s adjusted earnings per share growth of 7.7 percent helped by sales growth of 7.2 percent apart from 50 basis points margin expansion.
In their research note to clients, the analyst commented, “We are less bullish on WPPGY as management is guiding a softer ’17 outlook. With no near term re-rating catalyst and a fair valuation, we lower WPPGY to Hold.”
However, other brokerage, Wedbush reiterated its Outperform rating on March 6 on the stock. The firm, however, trimmed its price target to $130 from $138 on WPP shares.