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No growth expected in 2018 as market frets about Google and Facebook threat

WPP (WPP) £12.50

Loss to date: 11.7%

Original entry price: Buy at £14.16, 31 August 2017

A fragile recovery in global advertising agency WPP’s (WPP) shares is shattering after the company downgraded earnings guidance alongside its worst full year results since the financial crisis (1 Mar).

Chief executive Martin Sorrell admits 2017 was ‘not pretty’ and 2018 does not look too much better with no sales growth expected. This is disappointing given the FIFA World Cup should in theory provide a boost to advertising spend.

The company is planning to merge individual agencies to offer a more straightforward proposition to prospective clients.

Taking a longer term view on the shares means deciding if its recent problems are cyclical and therefore temporary, as WPP insists; or structural as advertisers shun WPP to deal with social media platforms like Facebook and Google directly.

Liberum analyst Ian Whittaker says ‘structural concerns are overdone’ but in order to convince investors this is the case, WPP needs to return to growth.




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