Omnicom Group Inc. (OMC), with a market cap of around $19 billion, is a leading player in the global advertising, marketing, and corporate communications sector. The New York-based company offers a broad spectrum of services, including advertising, public relations, and digital marketing, across key markets worldwide.
Shares of this advertising company have underperformed the broader market over the past 52 weeks. OMC has gained 21.3% over this time frame, while the broader S&P 500 Index ($SPX) has increased 28.3%. In 2024, shares of OMC are up 12%, compared to SPX’s 17.6% gain on a YTD basis.
Zooming in further, OMC’s underperformance becomes more evident when compared to the S&P 500 Communication Sector SPDR’s (XLC) 34.1% gain over the past 52 weeks and 20.1% returns on a YTD basis.
Omnicom Group has underperformed over the past year due to weaker growth in key regions like APAC and North America (excluding the US), coupled with challenges in adapting to rapidly evolving digital advertising trends and competition from emerging Gen-AI technologies. Moreover, despite beating Wall Street estimates for Q2 profit and revenue on Jul. 16, the stock dropped 4% the following day due to concerns over slower growth in its precision marketing segment and apprehensions about sustaining high ad spending levels in a potentially uncertain economic environment.
For the current fiscal year, ending in December, analysts expect OMC’s EPS to grow 7.3% year over year to $7.95. The company’s earnings surprise history is promising. It beat the consensus estimates in each of the last four quarters.
Among the 11 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings, one “Moderate Buy,” two “Holds,” and one “Moderate Sell.”
The configuration has remained steady over the past months.
On Jul. 18, UBS Group raised its price target for Omnicom Group to $120 - street-high price target and reaffirmed its “Buy” rating. This implies a potential upside of 23.8% from the current price. The mean price target of $107.90 represents a premium of 11.3% to OMC’s current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
