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Omnicom Group Inc OMC

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Omnicom Reported Strong Q2 Results With Rebound in Ad Spending; Raising FVE to $89

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

We are increasing our fair value estimate of Omnicom to $89 from $85 as the firm reported strong second-quarter results with the top- and bottom-lines coming in higher than FactSet consensus estimates due to the recovery from the pandemic, which was accompanied by better-than-expected return to ad spending. Revenue growth was driven by a strong rebound in demand for all services provided by the firm in all regions. In addition, management remained confident that growth will continue throughout 2021, although decelerating in the second half. The firm also expects some margin improvement for the year. While Omnicom posted solid results, reports stating that the NFL will take some of its media ad-spending in-house pushed the stock down 4%. If true, we do not expect such a move by the NFL to significantly impact Omnicom’s revenue, nor do we see the risk that other advertisers will follow and bring things in-house increasing.

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Company Profile

Business Description

Omnicom is the world's second- largest ad holding company, based on annual revenue. The American firm's services, which include traditional and digital advertising and public relations, are provided worldwide, with over 85% of its revenue coming from more developed regions such as North America and Europe.

437 Madison Avenue
New York, NY, 10022
T +1 212 415-3600
Sector Communication Services
Industry Advertising Agencies
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type High Yield
Employees 64,100


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