• by Steve McClellan  @mp_mcclellan, September 20, 2011

Wall Street firm Deutsche Bank said it was raising its profit and organic revenue growth estimates for ad holding company MDC Partners, in the wake of recent new business wins and a pair of acquisitions.

The wins include German carmaker BMW, sports apparel marketer Under Armour and video game company Activision. The acquisitions (in both cases, majority stake positions) include health care agency Concentric and fashion specialist Laird + Partners.

DB predicted that the Toronto-based holding company would post organic revenue growth of 15% to $933 million in 2011, which DB said was approximately three times greater than the average organic growth rate of MDC's holding company competitors. MDC's organic growth in 2012 is expected to be at least 6% compared to averages of 1% to 3% for competitors, DB stated.

"MDC is our top agency pick, particularly in an environment where U.S. ad market strength will be harder to come by in 2012," DB said in its investor note.

In its August report, DB noted that MDC was "at a fraction of the size of the [other holding companies] with growth based largely on share gains. With 51% exposure to digital, it isn't as dependent on ad market strength for growth, so should come through any macro downturn in much better shape than [its bigger competitors]."

DB estimated that MDC paid about $15 million for the two acquisitions, which should add a combined $20 million in revenue and $3 million to $4 million in pre-tax earnings to the company's coffers.

On MDC's expansion into healthcare marketing, DB noted it carried some risks. "The pharma industry is headed for dramatic change in response to regulatory challenges and the rise of self-directed care, with some of our contacts telling us that healthcare marketing budgets are going to get a lot smaller in the years to come."

If that proves correct, "Concentric will need to truly have a unique technology-driven approach with a solid grasp of the new customer channels in order to remain an engine of growth for years to come."

As for Laird, DB reported that it is likely MDC will "transform L+P from a specialist fashion agency to a generalist one with a high-end sensibility, similar to what it did with the HL Group. If they can nurture this at L+P the way they did at HL, then their plan should work."

The upgraded estimates come a week after two other holding companies -- Omnicom and Interpublic Group -- received downgraded performance estimates from financial firm UBS, which cited concerns about the economy.

Last month, DB also downgraded its financial expectations for both IPG and Omnicom. It reduced organic growth estimates for IPG in the fourth quarter from 3.3% to 1.4% and for 2012 from 5.7% to 1.4, citing the economy and client losses, including S.C. Johnson and Microsoft. For Omnicom, it reduced fourth-quarter organic growth from nearly 4% to 3% and 2012 organic growth from 5% to 2.5%, citing the economy.