We remain positive on WPP and raise our Target Price to 1650p from 1600p; we downgrade Publicis to Neutral and cut our TP to €70 from €79.
Overall the survey supports our view that the Agencies are still structurally well positioned relative to other Media sub-sectors. However, given the increasing scepticism of their value-added, and without an obvious global GDP upgrade to kick-start growth, we are more lukewarm on the space. We are also concerned about the unprecedented number of account reviews underway, with Publicis more exposed than WPP (1.4%-1.7% of revs vs WPP 0.8%-1.0%). Accordingly, Publicis shares have been weaker in Q2 but we expect adverse news flow to continue. Also, given our lingering concerns over client/staff risks from the failed Omnicom merger, its recent relatively low organic growth and the likelihood management will sacrifice margin for organic growth, we downgrade Publicis to Neutral and recommend buying WPP over Publicis.