Pivotal Research Downgrades WPP Due To Valuation

Brian Wieser of Pivotal Research Group downgraded shares of WPP WPPGY to Hold from Buy with a £1,360 price target on London-based shares (shares last traded at £1,289) due to valuation considerations.

“We believe that WPP remains the agency holding company industry's best-in-class player, with the best balance of focus between traditional agency services and higher growth emerging opportunities as well as global exposure,” Wieser wrote. The analyst adds that a new business record in 2014 “bodes favorably” for the company heading into the New Year.

Wieser believes that in the coming year WPP will generate organic growth above industry averages and margin growth should at least be in-line with management's guidance, if not better.

However, the analyst notes that shares are trading close to his discounted cash flow driven valuation on a year end 2015 basis, thus warranting a downgrade.