Despite improved business models, c.3% underlying organic sales growth and resilient margins, Ad Agencies continue to trade at a material discount to the market and Media sector. Investors continue to put Agencies in the ''cyclical'' bucket and fear a potential recession in the US might derail growth momentum. We argue that top agencies are in a better position to face any potential economic slowdown. We continue to favour Publicis (+) and Omnicom (+) and cut IPG to Underperform. Agencies in better position to face potential economic downturn Agencies have been impacted by fears of recession in the US. In their latest macro outlook, BNPP M360 economists expect the US economy to experience a soft landing rather than a recession, while GDP growth should progressively accelerate in the eurozone. Given revenue diversification from new services (data, DBT, retail Media, etc.), the focus on large brands (less exposed to macro cycle than SMEs) and variabilization of cost base (reduction in non-staff costs) in recent years, we argue top agencies are in a better position to face any potential economic slowdown than in the past. We expect stable trends for top agencies organic sales in Q3 with +3% growth We model c.+3% organic sales growth for top agencies in Q3 2024 (in line with Q2 24) but growth divergence should remain, with Publicis/Omnicom (5% OSG) outperforming IPG/WPP (0%/+1%). Publicis and Omnicom remain our top picks while we turn more cautious on IPG (cut to U/P) We continue to favour Publicis and Omnicom as we expect both to maintain solid outperformance supported by organization structure, investment in platform and focus on fast-growing segments (notably commerce). We lower IPG to Underperform (from Neutral) on poor business win momentum, persistent weakness at specialist agencies and risk of pressure on mid-term adj. EBITA margin. Also see INTERPUBLIC: Challenging road ahead published today.