NEW YORK (TheStreet) -- Omnicom Group (OMC) stock has been downgraded to "neutral" from "buy" with a $75 price target, Goldman Sachs said. Additionally, the firm cut Omnicom from its conviction list, noting valuation is less compelling, without the Publicis merger.
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Separately, TheStreet Ratings team rates OMNICOM GROUP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate OMNICOM GROUP (OMC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, reasonable valuation levels, growth in earnings per share and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the Media industry average, but is less than that of the S&P 500. The net income increased by 0.2% when compared to the same quarter one year prior, going from $205.10 million to $205.50 million.
- OMC's revenue growth trails the industry average of 14.7%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- OMNICOM GROUP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, OMNICOM GROUP increased its bottom line by earning $3.72 versus $3.61 in the prior year. This year, the market expects an improvement in earnings ($4.08 versus $3.72).
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: OMC Ratings Report