Analyst Downgrades Omnicom, Shares Fall

PHILADELPHIA (AP) — Shares of Omnicom Group Inc., the nation's largest advertising and marketing conglomerate, fell Wednesday after an analyst downgraded the stock, noting the lack of stronger catalysts to boost 2010 ad spending that could propel the stock upward in the near term.

BMO Capital Markets analyst Dan Salmon cut Omnicom to "market perform" from "outperform." He said Omnicom's shares have risen well off historical troughs and now hover around his price target of $36 amid a general market recovery and increased confidence that the ad-spending slump has bottomed.

But Salmon said he remains neutral on the four ad giants, including WPP Group Plc, Interpublic Group of Companies and Publicis Groupe SA.

"We do not foresee meaningful upside in any of the shares until more concrete catalysts for upward 2010 estimate revisions appear, the first of which could be fourth-quarter project spending," Salmon said in a research note.

While Omnicom remains his preferred stock due to its market position and adherence to keeping costs down in an uncertain economy, Salmon said he sees greater opportunities for investors in smaller companies such as Omniture Inc. that benefit faster from an ad spending rebound.

Shares of Omnicom were down 65 cents, or $1.8 percent, to $35.35 in midday trading.