Analyst Downgrades Omnicom From 'Outperform,' Cites Lack Of 'Visibility,' Uncertainty About Its Future
- by Joe Mandese @mp_joemandese, April 7, 2015
Citing a
“lack of visibility” about the company’s earnings future, influential Wall Street analyst Dan Salmon has downgraded his recommendation for Omnicom’s stock from
“outperform” to “perform.”
“The fourth quarter 2014 results were good, but as always, management offered a frank and honest outlook for 2015 and it is clouded with less visibility than a year ago,” the BMO Capital Markets analyst wrote in an equity research report sent to investors in February, adding, “Be it the swings in currencies and the impacts it could have on clients’ cost structures or easing emerging markets growth, 2015 simply does not offer the same foundation for visible growth as 2014 did.”
Despite the uncertainty and the downgrade, Salmon said Omnicom “remains a core holding” and added, “we could be wrong if the macro environment proves better or new services emerge faster than expected to perk up organic growth.”
In addition to the recommendation downgrade, Salmon’s team lowered estimates for the target price of Omnicom shares to $77 from $82 previously.
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If you boil this piece of analytic wisdom down, it says: it's easier to predict the past than the future. What may be happening is, due to the uncertainties, Omnicom shares have become more risky. That could evolve to mean that if the "problems" work out favorably, of if the Company manages its way through them, the stock will do really well, and if the problems overcome the Company and financial results are poor, the stock could tank. So, for risk-tolerant investors who have some confidence in management, this stock is actually more attractive than formerly. For the nervous, however, it's not.