The Interpublic Group of Companies, Inc. (IPG) is a global leader in the advertising and marketing industry. With a market cap of $10.3 billion, this New York City-based firm specializes in delivering innovative marketing solutions through its comprehensive network of agencies, offering expertise in advertising, digital marketing, communications, and media planning to clients worldwide.
Shares of Interpublic Group of Companies have underperformed the broader market considerably over the past year. IPG stock has dipped 7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 30.1%. In 2024, the stock is down 13.1%, compared to SPX’s 24.1% returns on a YTD basis.
Narrowing the focus, IPG has also lagged behind the Communication Services Select Sector SPDR ETF Fund (XLC). The exchange-traded fund has gained about 37.4% over the past year and 34% on a YTD basis.
Interpublic Group's shares have faced market underperformance amid concerns over intensifying competition, evolving customer behavior, and challenges within digital marketing trends. Following its Q3 earnings release on Oct. 18, shares experienced a marginal decline. The company reported adjusted EPS of $0.70, unchanged from the prior-year quarter, while total revenues declined 1.9% year-over-year to $2.63 billion. Adjusted EBITA, excluding restructuring charges, came in at $385.8 million, down from $397.2 million in Q3 2023, reflecting pressures on operational performance.
For the current fiscal year, ending in December, analysts expect IPG’s EPS to decline 5.7% to $2.82 on a diluted basis. The company’s earnings surprise history is impressive. It beat or matched the consensus estimate in each of the last four quarters.
Among the ten analysts covering IPG stock, the consensus is a “Hold” – a downgrade from the “Moderate Buy” rating three months ago. That’s based on two “Strong Buy” ratings, four “Holds,” and four “Strong Sells.”
On Oct. 23, J.P. Morgan (JPM) analyst David Karnovsky maintained a “Hold” rating on Interpublic Group of Companies, with a price target of $32, implying a potential upside of 12.8% from current levels.
The mean price target of $30.80 represents an 8.5% premium to IPG’s current price levels. The Street-high price target of $35 suggests an upside potential of 23.3%.
