WPP slumps as Credit Suisse reinstates coverage at 'underperform'

WPP slumped on Wednesday after Credit Suisse reinstated coverage of shares in the advertising company at ‘underperform’ with a 565p price target, pointing to "rising industry disruption".

The bank said its analysis of the marketing industry suggests clients are shifting spend more rapidly to digital transformation at a time when agencies still have at least 70% of their revenues from traditional services.

"Creative fee pressure, progressive in-housing of creative, production and media, competition in digital transformation from consultancies and new marketing technology (martech) firms remain the key challenges," it said.

Credit Suisse cut its 2020/21 earnings per share estimates by 43%/32% from pre-Covid-19 levels to 53.7p/69.3p. It also said it is around 5% below company-compiled consensus for 2021 and 11% below for 2022.

At 1255 BST, the shares were down 4.4% at 597.34p.