WPP (LON: WPP) shares surged more than 5% Thursday on the news reported late on Wednesday that Amazon had chosen WPP and Omnicom Media Group (OMG) to split its global media duties.
It comes after a decade-long partnership with IPG, with the decision following a thorough and extensive six-month review process by Amazon, after which it chose to partner with OMG and WPP.
Under the new partnerships, OMG will focus on the Americas, with WPP covering EMEA and APAC.
Following the news, Citi analyst Thomas Singlehurst reiterated a Buy rating and 1,100p price target on WPP.
While the investment bank acknowledged that it is unaware precisely how the economics will be split, it calculates the win for WPP will provide a tailwind of 0.3% to 0.5% in terms of 2025 organic growth and upwards of 2% to 3% upside to consensus forecasts, which they state will be welcome.
Moreover, Singlehurst told investors in a research note that he believes the news should provide some reassurance on the strength of WPP's structural position in global media buying, supporting the multiple.
In early August, WPP's price target was lowered to 725p from 775p by Macquarie analyst Tim Nollen. Nollen, who maintained a Neutral rating on the stock, told investors in a note that the company's second-quarter revenue and first-half earnings showed slow sequential progress, with a few specific macro issues prompting a modest guidance reduction.
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