Analysts suggest Publicis 'bitten off more than it can chew' as shares dive 13%

Campaign 11 Oct 2019 08:32

Publicis Groupe's share price dived 13% to €37.49 this morning (Friday) to its lowest level in more than seven years, with analysts saying that the ad holding group has potentially "bitten off more than it can chew" with acquisitions. The news also sent WPP's share price down 4%.

The company performed below market expectations, reporting a 2.7% fall in Q3 revenue, while forecasts for full-year 2019 are for a 2.5% fall. Publicis's revenue decline in Europe was 3.3%, but North America and Latin America fared worse, down 3.6% and 7.2% respectively. In the UK, revenues were down 3.9% and in Germany down 5.3%.

Publicis attributed the turbulence mainly to cuts to adspend from a number of US clients, which are shifting budget away from traditional media.

However, Liberum analyst Ian Whittaker suggested otherwise. "Our view is that, while there are well-known challenges for [ad agencies], a significant number of the problems are Publicis-specific and we think it is best to be on the cautious side of their guidance," he said.

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