• by David Goetzl  @dgoetzl, August 13, 2009

Even after a massive profit drop in the second quarter, Interpublic's stock jumped Thursday after a Wall Street analyst upgraded it to "buy," saying it offered "patient investors" an "exceptional" opportunity.

 

Deutsche Bank's Matt Chesler placed a $7-a-share target price on the holding company. And its stock was up about 6.5% in midday trading to about $6.50.

Deutsche Bank had been operating with a $5.50 target price, which is near where the stock closed back on Aug. 6.

Reasons for Chesler's bullishness included the broader potential for an economic recovery -- slthough IPG gave no indication in late July that one might be coming -- and opportunity for increased business from large client General Motors.

"While we cannot predict the timing and strength of an ad market recovery, we do believe that IPG will resume the progress of restoring margins to competitive levels when it emerges from the downturn," Chesler wrote in a report.

Now out of bankruptcy, GM could boost spending on the Chevrolet account, which is handled by IPG agency Campbell-Ewald.

IPG, however, has said organic revenue was down 10.5% in the first six months of 2009, and will be about the same in the second half. Profit dropped 76% in the April-June period. Deutsche Bank said there will be no "quick fix," but there is an improved "risk-reward" for IPG investors to benefit from a "self-sustaining cyclical recovery."

The company said Thursday it had restructured its recently successful Initiative media agency, and Deutsche bank said the holding company has a "bench full of talent" across its portfolio.

In late July, IPG CEO Michael Roth said it is "not advisable in the service business to take out costs on pace with the level of revenue decline we saw in the second quarter, without risking a deterioration in the talent base and the quality of service we deliver to clients."