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Omnicom's (NYSE:OMC) stock rose about 2% on Wednesday after Wells Fargo upgraded the shares to Overweight citing trends supporting stronger EPS growth.
The advertising company reported first quarter adjusted EPS of $1.67 and revenue of $3.6B Tuesday postmarket, with both these top and bottom line numbers beating estimates.
The firm sees an upside to Omnicom's organic growth from new business, media trends and Flywheel. Wells Fargo raised its organic growth plus adjusted EPS estimates for the company, and upped the price target on the shares to $106 from $91.
A team of analysts led by Steven Cahall noted that they now see Omnicom on a trend of stable-to-improving organic growth with acceleration from Flywheel/Precision Marketing.
With scope for more business wins, the analysts like the upside to estimates. They also think OMC can re-rate, as Agency data points become themes and those themes impact the multiples.
Cahall and his team noted that Omnicom said it has less major business to defend this year, but the analysts think Volkswagen's nearly $2B global media account is a risk.
However, the analysts added that there is a bigger potential opportunity to pursue from Amazon (AMZN), General Motors (GM) and Unilever (UL) which likely add up to more than $25B. While these large accounts would not likely affect 2024, the analysts think it sets up 2025 as having potential organic growth upside (and Flywheel will help).
Omnicom (OMC) has a Hold rating at Seeking Alpha's Quant Rating system, which consistently beats the market. The Seeking Alpha authors' (total 1 author in this case) average rating is also Hold, however, the average Wall Street analysts' rating is more positive with a Buy tag.