Ahead Of The Bell: Interpublic Upgraded

NEW YORK (AP) — Interpublic Group of Cos. is set to restore its profit margins as the economy recovers, a Deutsche Bank analyst said Thursday, upgrading shares to "Buy" from "Hold."

New York-based Interpublic, the world's third-largest advertising and marketing conglomerate, has struggled in the first half of 2009 amid one of the worst advertising slumps in years, driven by weak spending from auto makers and events marketers. Sales in the April-June quarter were down 20 percent year-over-year, while earnings tumbled 76 percent.

In a note to investors, Deutsche Bank's Matt Chesler said the upgrade comes "on the back of an improved economic outlook and business momentum," assigning a $7 price target to the stock.

The shares, which closed 2 cents lower at $5.99 Wednesday, are up 51 percent year-to-date, but still off 34 percent over the past year.

Chesler said IPG is "no quick fix," but a return to revenue growth appears closer. "While we can not predict the timing and strength of an ad market recovery, we do believe that IPG will resume the progress of restoring margins to competitive levels when it emerges from the downturn."