• by Joe Mandese  @mp_joemandese, June 4, 2018

Citing “downside risks,” Wall Street analyst Brian Wieser has downgraded his recommendation for WPP’s stock from “buy” to “hold. ” The move follows an earlier “opportunistic upgrade” of WPPs stock that he made earlier this year.

Among the factors that could drive WPP’s share price up from current levels, Pivotal Research Group's Wieser cites:

• A sale of Kantar would bring in cash to either reduce debt or provide resources for new acquisitions and would likely help bring the group’s overall growth rate up slightly; if nothing else, it would be favorably viewed by investors that have come to dislike the data business

• An appointment of a new CEO would go some distance toward resolving leadership and strategic direction of the company

• Liquidation of some of the company’s investment portfolio — including significant holdings in public securities, such as comScore and Globant, as well as private ones, such as Vice and AppNexus — would demonstrate some of the value of this portfolio

Among the factors that could drive WPP’s share price down from current levels, Wieser cites:

• At a company-specific level, there is a risk that the new CEO will not be an insider, which we think could cause further disruption in the management ranks and in the business itself. There is also a risk that no Kantar deal occurs, which we think would be negatively received by investors.

At an industry level, there are a wide range of trends that dominate investor perceptions. For example, the “threat” of consultants and in-housing of media came together in one piece of news last month, with the formal launch of Accenture’s previously announced efforts to help marketers bring programmatic buying in-house

Our view remains that the threat to traditional agencies is modest from in-housing of media — in-housing of creative could be a more significant drag at the present time, incidentally. 

Other issues will likely come back to the forefront with this week’s release of a new book focused on the advertising industry, entitled “Frenemies.” As the book explores a range of the topics challenging the industry (including fee transparency) our guess is that those issues will be front-and-center with marketers.