In the latest earnings report regarding UK stocks, shares of the FTSE 100-listed company WPP PLC (GB:WPP) plummeted on the release of its preliminary results for 2023. The stock traded down by 6.38% on Thursday, leading its way to the top FTSE 100 losers. Over the last 12 months, the stock has lost around 30% in trading.
While the annual figures largely met expectations, shareholders were anticipating insights into future strategies aimed at reviving the company’s performance. Market experts believe that the global advertising industry is going through a challenging time, which was reflected in WPP’s results.
WPP is the world’s largest advertising company, offering services like advertising, public relations, technology, communications, and more.
U.S. Tech Spending Woes Weigh on Earnings
In the fourth quarter, the company reported a 4.5% decline on a like-for-like basis in its largest market, the U.S. This decrease was primarily attributed to reduced expenditures from technology, healthcare, and retail clients in the region. However, WPP’s performance in the UK and India exhibited strength during the same period.
Revenue for the full year amounted to £14.8 billion, indicating a like-for-like increase of 3.2%. The company’s pre-tax profit decreased by 70% to $364 million, hit by restructuring costs and amortization of its brands. The group outlined plans to achieve approximately £600 million in annual savings by 2025 compared to its 2019 cost base.
Going forward, the company is optimistic about its growth in 2024, driven by events like the U.S. elections, the Olympics, and the Super Bowl. The company expects its revenue, excluding pass-through costs, to remain flat or achieve a modest 1% increase.
What Is the Price Target for WPP?
Based on the analyst consensus from TipRanks, WPP stock has received a Hold rating, supported by five Buy, five Hold, and two Sell recommendations. Analysts have set an average target of 882.5p for the WPP share price, indicating a growth of 20% from the current level.
