Publicis Posts Strong Q3 Growth, but Macro Uncertainties Continue to Hover; Shares Attractive

Publicis reported better-than-expected third-quarter total and organic net revenue growth with strong contributions from the firm’s consulting and data analytics services. Management upped its full-year organic growth guidance, which implies total 2022 net revenue above our Street-high projection. The firm also increased its free cash flow expectation as it foresees operating margin coming in at the high end of the previously guided range. While we are pleased with the results and a better outlook, we did not adjust our full-year estimates as current macroeconomic and geopolitical uncertainties could hinder ad spending, which we expect to continue in 2023 before a slight growth acceleration in 2024. We are maintaining our EUR 69 fair value estimate for Publicis and continue to view the narrow-moat name as attractive.