Valued at a market cap of $19.2 billion, Omnicom Group Inc. (OMC) offers advertising, marketing, and corporate communications services. The New York-based company offers a wide range of services in advertising, strategic media planning and buying, precision marketing, retail and digital commerce, branding, public relations, healthcare marketing, and other specialty marketing services to over 5,000 clients in more than 70 countries.
Shares of this media company have underperformed the broader market over the past 52 weeks. OMC has gained 24.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 30.6%. Moreover, shares of NOW gained 13.7%, compared to SPX’s 23.6% return on a YTD basis.
Narrowing the focus, OMC’s underperformance looks even more pronounced when compared to the Communication Services Select Sector SPDR ETF Fund’s (XLC) 37.1% gain over the past 52 weeks and nearly 32.3% return on a YTD basis.
Shares of OMC gained 1.4% after reporting its better-than-expected Q3 results on Oct. 15. The company’s adjusted EPS of $2.03 outpaced the Wall Street estimates of $1.97 and rose 9.1% from the year-ago quarter. Its revenue increased 8.5% on a yearly basis to $3.9 billion and surpassed the estimates of $3.8 billion. Significant revenue growth in the company’s Experiential and Advertising & Media division, coupled with a 6.5% organic revenue growth and a 7.9% EBITA rise, contributed to its strong performance.
For the current fiscal year, ending in December, analysts expect OMC’s EPS to grow nearly 7.2% year over year to $7.94. The company has a solid track record of consistently beating Wall Street's bottom-line estimates in each of the last four quarters.
Among the 11 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on six “Strong Buy,” one “Moderate Buy,” three "Hold,” and one “Moderate Sell” ratings.
The configuration is less bullish than three months ago, with seven analysts suggesting a “Strong Buy.”
On Oct. 17, Barclays maintained an “Overweight” rating on OMC and raised the price target to $121, which indicates a 23.1% upside from the current levels.
The mean price target of $115.20 represents a nearly 17.2% upside from OMC’s current price levels. The Street-high price target of $130 suggests an upside potential of 32.2%.
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