From Cazenova just now .... DYOR .... but quick :)

WPP - upgrade to OUTPERFORM - interims due 26 Aug which we expect to be strong, reflecting gd Q2 fig's already reported by peers. We see potential for EPS upgrades of up to 5%-10% N/T (combination of top line, margin & US$). L/T we expect EPS growth of up to 17%-18% pa before maturing at 11%-12% pa. Key risks are (1) further M&A (2) prem valuation (17.1x 06 EPS before any upgrade), representing a 31% prem to UK mkt & 33% to UK media sector. Despite this we still believe it has room to outperform. Our DCF valuation gives 760p, 28% upside from here.

Daws Hi,

SNAP !!!!

I only saw your post appear after I posted :))))

Onwards and upwards :)

Cheers,
PM

LOL - cracking set of results, looking forward to some blue days ahead. Can't wait for all that tasty weekend press, which includes Monday!

Daws

Just topped up :)

Cheers,
PM

Compare the Cazenova forecasts to the results, and even they were conservative ....

WPP - upgrade to OUTPERFORM - interims due 26 Aug which we expect to be strong, reflecting gd Q2 fig's already reported by peers. We see potential for EPS upgrades of up to 5%-10% N/T (combination of top line, margin & US$). L/T we expect EPS growth of up to 17%-18% pa before maturing at 11%-12% pa. Key risks are (1) further M&A (2) prem valuation (17.1x 06 EPS before any upgrade), representing a 31% prem to UK mkt & 33% to UK media sector. Despite this we still believe it has room to outperform. Our DCF valuation gives 760p, 28% upside from here.


WPP

2005 INTERIM RESULTS IN ACCORDANCE WITH IFRS
---------------------------------------------

Billings up almost 24% at #11.3 billion
-----------------------------------------
Reported revenue up almost 22% to #2.5 billion
-----------------------------------------------
Like-for-like revenue up 6%
----------------------------
Headline operating profit up over 31% to #300 million
------------------------------------------------------
Headline profit before tax up 32% to #255 million
---------------------------------------------------
Diluted headline earnings per share up almost 28% at 13.8p
-----------------------------------------------------------
Net earnings up over 45% to #135 million
-----------------------------------------
Interim ordinary dividend up 20% to 3.00p per share
----------------------------------------------------

Get the profit takers out of the way, and let the institutions and funds pile in, they know what WPP are worth, and the growth, and they would love 25% profit from these, even if it takes them a few months or up to a couple of years to get it, that would still make it a good performer for them.

They don't pile in until a few days after the news ....

Cheers,
PM

Paul, bit surprised by the markets reaction. Still expect to finish the day blue, the results are there for everyone to see!

Daws

Not sure there has been a rash of profit taking Paul, the SP has been under selling pressure prior to the results. Sometimes there is no explaining the Markets reaction to a good set of results. On this occasion I don't think that the good news was already in the SP, so therefore we should see some healthy rises over the coming weeks. Fully agree Daws and would expect to finish in the blue, at the very least in the region of 590, trendline support.

pth

Pth,

590 appears to be the bottom of our recent trendline, so could be a great buying opp. Good to see Merrill Lynch reiterating its buy stance and 690p price target.

Daws

Daws

Opened a long about a week a go, which is looking a tad sad at the moment, but averaged down with two more longs this morning. Trend is up and 590 looks like the trend support so hopefully the dip is now complete and next week should see the up trend resume.

pth

Hi All,

Cazenova say that the price should go up much better after the 9:30 morning meeting is over, and analysts can see that the growth is still there. They wondered about the recent trading, as the growth seemed to have slowed a bit, but the figures were confusing, as it was the strong Aug 2004 that made the figures seem to be dropping, but they are still going up.

Cheers,
PM

Hi All,

These should fly now, turned blue here, morning meeting with analysts will make them all send out positive notes, and this afternoon the USA will open, and supercharge the price :)

Cheers,
PM

lol - Snap, also averaged down this am at 589.8. If i was more patient i could of got lower.. i'll never learn.

Daws

Hi All,

News is flying ....

http://news.google.co.uk/news?q=wpp&hl=en&lr=&tab=wn&ie=UTF-8&scoring=d

Cheers,
PM

WPP profits jump 32%

9.30am: Sir Martin Sorrells WPP network saw revenues increase by 6% in the first six months of 2005, with pre-tax profits up a massive 32% year on year to 255m.
The owner of the MindShare and Mediaedge:cia media agencies and a string of creative shops said like-for-like revenues once the addition of the Grey network had been added increased by 22% to 2.47bn.

Across the group new business billings made 1.9bn, as its Asia-Pacific, Latin America, Africa and Middle East regions performed well.

Revenues elsewhere in the group saw a 5.9%, 2.7% and 4% increase in North America, the UK and Continental Europe respectively.

The group said: Western Europe, although relatively more difficult, has improved and the United Kingdom has stabilised.

Rates of growth in Europe continue, however, to be two-paced, with Germany, France, Sweden, Denmark, Benelux and Portugal remaining softer and Central and Eastern Europe, Russian and the CIS countries in particular, more buoyant.

Elsewhere, WPP said the role of procurement teams in marketing decisions and the concentration of media ownership in some countries would stimulate consolidation in the industry, including advertising and marketing services.

The group is very well positioned to capitalise on these developments and to focus on developing the best talents, the strongest management structures and the most innovative incentive plans in the industry for our people, the group said in a statement.

http://www.mediaweek.co.uk/articles/folder2005/08/AugustDaily/WPP-1h2005-results

Broker tips: WPP, HMV, Rentokil, JD Wetherspoon
Fri 26 Aug 2005


LONDON (SHARECAST) - Ad agency WPP was stuck in the red today after UBS stuck with its neutral stance with a 605p price target, saying the results came in below expectations.

Merrill Lynch took a more bullish stance, as it maintained its buy stance and 690p price target.

Merrill said WPP, which reported a headline pre-tax profit before goodwill amortisation up 32% to 254.8m, has a "strong, well regarded management" and credible long term strategic targets.

Good results guys as forecast but as I stated earlier in the week the news appears to have already been in the price which is why the shares have gone nowhere today. Real shame.

What happened to that then..

Queen Hi,

The price is still nowhere near Merrill's price of 690p, let alone Cazenova's DCF of 760p.

As I said earlier today, institutions and funds wait for the price to drop back, then they pile in. It may be days or a couple of weeks, they are not in the hurry that most P.I's appear to be to jump on a bandwagon, so long as they know the 'value' is still there, they will be buying when they are ready, and the price will creep up slowly over the next few weeks/months.

Cheers,
PM

PM1 - that's as maybe but the market as a whole, for whatever reason, has voted with its feet today and shunned WPP, results and all. I've held for 2 years and am a believer but today was pathetic.

Queen Hi,

Today was profit taking by short termers and traders, just watch the price over the next 3-4 weeks, as the institutions and funds buy in for the longer term, they are not daft, they do this for a living, and they never buy in on news, they wait for the volatility to die down, and the traders to go elsewhere, then they buy in BIG chunks.

Cheers,
PM