Stagwell Stock Could Outperform With 12% Growth, But Analyst Warns Of Market Skepticism Amid Macro Concerns

Rosenblatt analyst Barton Crockett reiterated the Buy rating on Stagwell Inc. STGW on Thursday, with a price forecast of $10.

The analyst writes that Stagwell doesn’t need to experience double-digit growth or significant margin expansion to justify a higher valuation compared to its peers.

Even if it grows at a more modest mid-single-digit pace with stable margins, Stagwell should still command a strong EV/EBITDA multiple. However, the company is currently trading at 6.7x 2025E EBITDA, slightly below the peer average of 6.9x and the historical outperformer Publicis, which is valued at 7.3x.

Per Crockett, if Stagwell were able to meet its growth projections, the analyst suggests that its multiple could rise, supporting a price forecast of $10 per share.

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Despite being down 9% year-to-date, which is better than the peer group’s 15% decline, Stagwell’s stock could perform better if it achieves its 12% five-year compound annual growth rate and 500+ basis points in margin expansion, the analyst writes.

Meanwhile, there is skepticism in the market due to broader macroeconomic concerns, and there is a risk that Stagwell could miss its targets, which would negatively affect its stock performance, even if the company continues to grow faster than its peers.

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Crockett has updated the firm’s financial model to better align with Stagwell’s long-term goals.

While the quarterly cadence for 2025 has shifted, with less growth expected in the first quarter and more in the fourth, the overall revenue forecast for the year remains largely unchanged.

Previously, the analyst had projected Stagwell would achieve double-digit revenue growth mainly through acquisitions rather than organic growth, but now Crockett adjusted the expectations to focus more on Stagwell’s revenue ambitions.

Additionally, the analyst had assumed steady margins in the past, but given the company’s recent guidance on AI-driven cost savings, the analyst now sees margin expansion in the near term.

Price Action: STGW is down 6.31% at $5.648 at last check Thursday.

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