Broker snap: WPP has the best emerging market exposure, says Nomura

1st Mar 2012 11:44

Nomura has maintained its positive stance on advertising and media giant WPP, saying that the group's 2011 earnings and 2012 guidance were better than expectations.Martin Sorrell's firm reported full-year organic revenue growth of 5.3% for last year, in line with the broker's forecasts, but the operating margin surpassed expectations of 14% coming in at 14.3%. Adjusted earnings per share (EPS) were 67.7p, ahead of Nomura's 64.9p estimate.Meanwhile, the group forecasts making a profit before interest and tax of around £1,429m in 2012, up from £1,229m in 2011 and ahead of the broker's £1,405m estimate.The broker said it remains a buyer of WPP due to five main reasons: "a) the best emerging market exposure of the agency group; b) decent digital capability; c) a low valuation relative to peers, the market and history; d) earnings growth should continue to benefit from acquisitions; and e) excess cash not deployed for acquisitions is likely to be used for increasing the dividend payout ratio and share repurchase."A 990p price target and buy recommendation are maintained.BC