Noting that it had forecast lower growth, Merrill Lynch expressed more optimism looking ahead, as it now expects the ad holding company's share price to rise from its current $72 average to $100 sometime next year.
"Our $100 share price objective is based on [Omnicom's] stock achieving a 20 percent premium to the market on our 2005 estimates," said Merrill ad industry analyst Lauren Rich Fine, citing Omnicom's long track record of financial success.
The caveats she included that might prevent Omnicom from reaching a higher share price are uncertainty about the economy, the magnitude of the advertising recovery, client compensation issues, and potential earnings dilution from accounting rule changes.
In releasing its earnings report for the third quarter, Omnicom also reported a 17 percent increase in net income to $145.3 million from $124.6 million for the same period last year.
Omnicom saw double-digit revenue growth across its business categories, with traditional advertising up nearly 11 percent, specialty marketing up 18 percent, and public relations up 14 percent, the company said in its report.
More than half of Omnicom's revenue is earned in the United States, where spending on the Olympic Games and election campaigns have helped boost total advertising spending by about 7 percent this year, according to industry analysts.