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WPP (Q1 update 30 April)
After the departure of the founder and CEO, Sir Martin Sorrell, the first quarter (Q1) trading statement from WPP is beautifully well timed. The company will be under pressure to move quickly to find a successor, in order to avoid losing too many clients and also reduce disruption to the strategic reset that remains a job half done. The ad giant has a lot of work left to do, as the industry as a whole struggles with fundamental changes in the advertising model. WPP trades at just 9.6 times forward earnings, against a 12.8 two-year average, and is now at a 47% discount to its peers, compared to an average of 21% over the past 24 months.
WPP shares have fought to hold the £10.90 level over the past month, the lows from mid-2014. The great rally from the lows of October 2008 is a distant memory. If £10.90 continues to hold then the next target is £12.40, and then onto the trendline from the 2017 highs, which would suggest a breakout above £13.00 is needed to change the outlook here.