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12 Oct 2023
Solid Q3 helped by Epsilon and Media strength
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Solid Q3 helped by Epsilon and Media strength
- Published:
12 Oct 2023 -
Author:
Packer William WP | Langlet Nicolas NL -
Pages:
11
Publicis delivered strong Q3 sales (OSG +5.3% vs +3.8% cons.) with solid momentum at Epsilon and Media offsetting slowdown at Sapient and low single digit growth for Creativity. The group upgraded all its financial KPIs for 2023 with a mid-point at c.+1% ahead of consensus. This release shows once again Publicis'' competitive advantages (balanced business mix, differentiated go to market, agile platform organization) that should support further outperformance in the near term. We increase estimate by c.+2% and price target to EUR95 vs EUR93. Outperform reiterated.
Q3 momentum well ahead of expectations thanks to Epsilon and Media
Q3 23 sales grew +0.1% at EUR3,241m (+2% vs cons.). The growth was supported by +5.3% OSG, +1% MandA, -6% FX. On a compound basis vs 2019, Q3 23 OSG came at +5.1% an acceleration vs +4.7% in Q2 23. The growth was driven by Europe (OSG +10.7%) while the US slowed down at c.+3.2%. Epsilon OSG accelerated at +10.5% (vs +6.8% in Q2), while Media remains solid at c.+8% helped by global Media wins.
Guidance on all KPIs once again upgraded
The group increased its FY 23 guidance and now expect LFL sales between +5.5% and +6% (vs c.+5% before and cons. at +5.2%), margin of 18% (vs ''around 18%'' before and cons. At 18.0%), FCF before WC at c.EUR1.7bn vs EUR1.6bn before. Based on our calculation, the mid-point of the guidance implies c.+8% EPS growth (c.+1% vs cons.).
Conference call main highlights
(1) Q4 organic sales trend per practice likely in line with Q3, (2) Solid momentum at Epsilon to be maintained in the near future, (3) No cut at Sapient, mostly delays. No doubt the trend will reaccelerate as soon as macro improved. (4) Media very strong notably in Europe thanks to new global media wins, (5) MandA transactions in the pipeline to match the 2023 EUR500m/EUR600m MandA investment objective, (6) FX impact on revenue expected EUR-350m (c.-2.8% headwind).