Young & Rubicam
shot up 8 1/4, or 13%, to 70 13/16 in early morning trading Thursday on
news that the ad agency will be added to the
. (Y&R ended up 7 5/8, or 12%, to 70 3/16.)
Y&R will replace
, which is being acquired by
, after the close of trading next Wednesday. (General Instrument closed up 1 1/8, or 1%, to 84 1/2, while Motorola finished up 2 1/4, or 2%, to 147 7/8.)
"It is a little bit of a graduation" for Y&R, one of the largest ad agencies in the world, said Kevin Gruneich, who covers the industry for
, which led Y&R's initial public offering in May 1998. "It gives the company recognition as one of the major corporations in the country."
Y&R's ascension from IPO to part of the S&P 500 in little more than a year-and-a-half is "significantly faster" than most, Gruneich added.
The company joins ad giants
Interpublic Group of Cos.
on the index. And joining the S&P caps off what has been an excellent year for the company; its stock has appreciated 93% since the beginning of the year, Gruneich said, compared with 73% for Omnicom and 37% for IPG. Despite those gains, Y&R, with a market cap of roughly $5 billion, still lags far behind its larger competitors; Omnicom clocks in at nearly $18 billion and IPG at more than $15 billion. (Omnicom ended down 7/8, or 1%, to 99 11/16. IPG finished up 11/16, or 1%, to 55 1/8.)
Gruneich rates Y&R a buy.