Barclays Media analyst Julien Roch is four-star rated on TipRanks, focusing mainly on media companies – and he has tipped one particular stock, S4 Capital (GB: SFOR), as being undervalued.
The media sector is currently facing difficulties sparked by the economic slowdown and declining advertising budgets. Julien Roch remains positive and believe that the sector will perform well in the long run.
He is ranked 1,552 out of 7,914 analysts on TipRanks and was one of TipRanks’ best-performing analysts for the UK market in 2021.
Roch is the Managing Director at Barclays Capital. After working with Merrill Lynch, he joined Barclays in 2009.
According to TipRanks, Roch has an average return of 5.6% per rating and a 51% success rate.
Let’s see what’s catching his attention.
Results delayed but growth on track
S4 Capital is a digital advertising and marketing service company. Led by an industry veteran, Sir Martin Sorrell, the company almost doubled in size and posted a revenue of £687 Million in 2021.
The stock has been on a upward trajectory since its debut on LSE. However, since last year the stock is trading down by 67%. This is mainly due to concerns over the delay in its FY results. The results were delayed twice, as the accountant PwC was unable to complete the audit. The company finally delivered unaudited results in May 2022.
Sir Martin Sorrell described the delay as “embarrassing and unacceptable”. He said, “Significant changes in our financial control, risk and governance structure, and resources at board, company and practice level are being implemented and planned to try to ensure this never happens again and we return to a normal financial calendar.”
Julien Roch said “the auditing problem sounds really minor,” and wondered, “Will investors be entirely convinced? That is the question.”
The company won new big name clients such as BrewDog, TikTok, Diageo
(DEO), and Booking.com (BKNG) in its last quarter. This adds to its current client list which includes companies such as Google (GOOGL), Facebook (META), Amazon (AMZN).
It aims to add 20 clients every year, each generating revenues of £15.3 million from 2022 to 2024. But the company has to focus on increasing its profitability to convince investors.
Julien Roch reiterated a Buy rating on the stock with a price target of 550p. Barclays analysts further added, “S4 Capital shares are way too cheap, as the market is already pricing the risk of a recession into the shares.”
Wall Street’s take
Other Wall Street analysts are also bullish on the stock. According to TipRanks’ analyst rating consensus, S4 Capital stock has a Strong Buy rating based on four buys. The average price target is 627.5p implying 189.4% upside potential. The stock has a high forecast of 725.0p and a low forecast of 550.0p.
Closing notes
Considering Roch’s experience in the sector and confidence in the company, the stock seems to be a perfect fit for long-term investment.
