BMO Discontinues Coverage Of Publicis, Upholds 'Market Perform' Rating


The equities research team at BMO Capital Markets has discontinued its coverage of Publicis Groupe’s stock.

Analyst Daniel Salmon said the decision is due to a reallocation of the team’s resources, though BMO’s market rating -- “Market Perform” -- has been unchanged since April 2015.

“Our Market Perform rating was predicated on our belief that Publicis would revive organic revenue growth trends to be back in line with the peer group,” Salmon writes, adding, “We believe this is achievable through Publicis' theme from their Investor Day in March, "Publicis 2020: Sprint to the Future," where management expects +4.0% organic growth by 2020 through accelerated organic growth, investing in the future, and increasing efficiencies to fund investments and increase operating margins.

“But after four straight years of annual organic revenue growth underperformance and a CEO succession recently completed, visibility into mid-term organic growth and margin trends remains challenging,” he adds, concluding, “We continue to believe that the most important challenges to the agencies are not CPG headwinds and disintermediatin from tech platforms, but rather, the encroachment of IT services/consultancies.”

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