Broker tips: WPP, Standard Chartered

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(Sharecast News) – Analysts at Berenberg hiked their target price on media group WPP from 1,185.0p to 1,230.0p on Thursday after the company raised guidance despite apparent headwinds.

Berenberg stated that with Q1 like-for-like growth of 9.5%, ahead of company-compiled consensus of just over 7%, WPP’s new guidance of 5.5-6.5% reflected a stronger quarter for the business, while Q2-4 assumptions were broadly maintained.

However, given growing headwinds to consumption and, as far as Berenberg was concerned, marketing expenditure, this approach was “a bit surprising”, particularly as peers OMC and Publicis, which both performed slightly better in the first quarter, maintained their full-year outlook, effectively allowing for a softer performance in the rest of the year.

“While WPP’s approach reflects the fact that it is not noticing any change in customer behaviour – a point also made by its peers – it seems quite optimistic given the plethora of data points suggesting that a squeeze is coming,” said the German bank, which reiterated its ‘hold’ rating on the stock.

“We raise our lfl revenue less passthrough costs growth from 4.6% to 4.9% for 2022, which is below the aforementioned guidance of 5.5-6.5%.”

Analysts at Bank of America hiked their target price for shares of Standard Chartered from 670.0p to 700.0p on Thursday following the lender’s better-than-expected first-quarter numbers.

Earlier in the session, Asia-focused StanChart posted pre-tax profits of $1.5bn, putting it a whopping 44% ahead of the analyst consensus.

StanChart’s common equity Tier 1 capital buffer also beat expectations, coming in 60 basis points ahead of consensus and, on the back of the group’s new guidance for risk-weighted assets in 2022, BoA revised its year-end estimate for CET1 to 14.1%.

After BoA upwardly revised its estimates for StanChart’s earnings per share in 2022, 2023, and 2024 by 10%, 7%, and 6%, respectively, the analysts said the shares were left trading on a “striking” four times its estimated 2024 profits.

Bank of America, which reiterated its ‘buy’ rating on the stock, added that on a 12-month forwards earnings basis, the shares were at a 30-year low.