Interpublic Group Hits a 52-Week High - Analyst Blog

Shares of advertising services provider The Interpublic Group of Companies, Inc. IPG hit a 52-week high of $18.62 on May 23, 2014, before closing the trading session a notch lower at $18.56. This translates to a healthy 1-year return of 26.4%.

Interpublic Group's share price has been on a steady uptrend since mid-April. Despite its strong price appreciation, this Zacks Rank #2 (Buy) stock has solid fundamentals that may further drive the stock upward. The stock is currently trading at a forward P/E of 18.3x and has a long-term earnings growth expectation of 9.7%.

Growth Drivers

Weber Shandwick, the public relations (PR) unit of Interpublic Group, recently acquired Swedish creative PR agency Prime and its business intelligence division United Minds. Although the financial details were not disclosed, the deal was reportedly the largest acquisition by Weber Shandwick since its inception in 2001.

The acquisition will help Interpublic Group to expand its footprint in the Nordics and allow it to exploit Prime's award-winning creative talent. Under an integrated managerial and creative talent pool, the transaction is expected to drive innovation and improve client service.

Interpublic Group earmarks about $150 million a year for acquisitions, and had completed 11 strategic acquisitions last year. The company has finalized six deals so far in 2014, the most notable among them being the acquisition of digital company Profero in January.

Interpublic Group's digital capabilities, diversified business model and geographic reach are expected to offer distinctive quality and a competitive advantage to its clients. The company's efforts in reducing costs, continuous margin improvement, stronger balance sheet and better capital structure further enable it to remain profitable amid a challenging macroeconomic environment.

Other Stocks to Consider

Other stocks that look promising and are worth a look now include Sizmek Inc. (SZMK), YuMe, Inc. YUME and Huron Consulting Group Inc. HURN, each carrying a comparable Zacks Rank #2 (Buy).