JP Morgan reiterates 'overweight' on WPP

29th Nov 2016 09:02

(ShareCast News) - JP Morgan Cazenove on Tuesday left its rating on WPP Group at 'overweight' but cut its rating to 2,032p from 2,075p."We remain bullish on WPP as 1) organic revenue growth and earnings appear well supported; 2) our analysis shows little correlation between its share price with the 10-year US Treasury bond yields; and 3) valuation remains attractive," JP Morgan said."We have a high degree of confidence in WPP's ability to deliver earnings growth of at least +9% compound annual growth rate over the next two years and with a 8.2% equity free cash flow yield the shares remain cheap."JP Morgan said exposure to worse trading conditions in emerging markets, which accounts for 31% of revenues, is a concern. However the bank sees a relatively easy comparative base from the second quarter of 2017 with the two-year stack of quarterly organic revenue growth in emerging markets reducing from a run-rate of 7-8% to 4-5% at the second quarter of 2016.JP Morgan also noted that WPP is $5.3bn net new business positive as of end September 2016 with further important wins in the current quarter supporting growth next year including Walmart, Fox and Toyota Europe.Shares dipped 0.06% to 1,705p at 0934 GMT.