Last Update 03 Dec 25

WPP: Restructuring And AI Initiatives Will Drive Long-Term Share Re-Rating

Analysts have trimmed their price targets on WPP by roughly $3 per share, or about 10 to 15 percent, as they factor in a more cautious outlook tied to prolonged restructuring, balance sheet concerns, and slightly lower medium term growth expectations.

Analyst Commentary

Recent Street research on WPP highlights a mixed backdrop, with analysts balancing incremental optimism on valuation against ongoing concerns around execution risk and balance sheet strength.

Bullish Takeaways

Bullish analysts see upside potential from current depressed multiples, arguing that even modest progress on restructuring could support multiple re-rating over the medium term.
The decision by some firms to retain Buy ratings despite reduced price targets suggests confidence that WPP can ultimately stabilize organic growth and protect earnings power beyond the next restructuring cycle.
Reports of industry interest in WPP assets, including potential strategic combinations, reinforce the view that the company’s portfolio still holds strategic value that is not fully reflected in the share price.
Incremental EPS cuts of only low single digits for 2026 and 2027 indicate that long term profit expectations have not been radically reset, implying scope for upside if management executes more smoothly than feared.

Bearish Takeaways

Bearish analysts emphasize a deep, prolonged turnaround with repeated restructuring cycles, seeing this as a drag on near term execution, client momentum, and visibility on sustainable growth.
Concerns around the need for a materially stronger balance sheet weigh on confidence in WPP’s ability to invest for growth while also navigating macro and industry headwinds.
Some view private equity involvement or a large scale break up as less plausible, which limits the likelihood of a rapid, event driven rerating and keeps focus on slower, operational improvement instead.
Lowered price targets in both the UK and US listings, including from JPMorgan, underscore a more cautious view on valuation as slightly weaker organic sales growth expectations are reflected in models.

What's in the News

Havas N.V. has reportedly expressed interest in WPP, with potential scenarios ranging from a full takeover to acquiring select assets, though no formal bid has emerged yet (Bloomberg, citing The Times).
Following media speculation about a possible deal involving WPP, Havas CEO Yannick Bollore told employees the group is not in discussions with WPP about an investment, while leaving the door open to larger acquisitions aligned with its strategy in the future (Bloomberg).
WPP cut its 2025 guidance, now expecting like for like revenue less pass through costs to decline 5.5% to 6.0% and headline operating margin to be about 13%, signaling a tougher trading environment than previously anticipated.
The company launched WPP Open Pro, a new AI powered marketing platform that lets brands of all sizes plan, create, and publish campaigns independently, aiming to broaden WPP’s addressable market and deepen adoption of its AI tools.
WPP and Google agreed a five year, $400 million expansion of their partnership focused on cloud and AI, giving WPP early access to Google’s latest AI models and embedding Google technology more deeply into WPP Open and client solutions.

Valuation Changes

Discount Rate has risen slightly from 9.96% to about 10.18%, signaling a modest increase in the perceived risk profile or required return.
Revenue Growth assumptions are essentially unchanged at around minus 15.23%, indicating no material shift in top line expectations.
Net Profit Margin has improved slightly from roughly 5.44% to about 5.45%, reflecting a marginally more optimistic view on profitability.
Future P/E has edged up modestly from about 11.28x to roughly 11.33x, implying a small increase in the valuation multiple applied to forward earnings.

Accelerated AI adoption and tech-driven restructuring are enhancing operational efficiency, automation, and margins, supporting more stable and predictable earnings growth.
Strategic investments in digital, data, and high-growth marketing areas position WPP to capture greater global market share as digital advertising budgets expand.
Stagnant growth, competitive pressures, operational challenges, and changing client behavior threaten WPP's revenue stability, margin resilience, and positioning within the advertising industry.

Catalysts

About WPP

A creative transformation company, provides communications, experience, commerce, and technology services in North America, the United Kingdom, Western Continental Europe, the Asia Pacific, Latin America, Africa, the Middle East, and Central and Eastern Europe.What are the underlying business or industry changes driving this perspective?

WPP's accelerated investment and adoption of AI-powered platforms (notably WPP Open and Open Intelligence) is improving operational efficiency, increasing automation, and enabling more scalable, data-driven, personalized advertising solutions. As WPP rolls this out globally and gains further client adoption, these initiatives are expected to support higher net margins and create opportunities for margin expansion in the medium to long term.
The transformation of WPP Media into a unified, technology-centric, data-powered organization (including the InfoSum acquisition and centralization of leadership/processes) should enhance its ability to capture incremental share of rising global digital advertising budgets, especially as clients seek integrated, omnichannel, and measurable solutions. This positions WPP to return to organic revenue growth as media budgets recover and digital share expands.
WPP's early and broad-based investments in AI, martech, and automation-supported by strategic acquisitions-are helping it close competitive gaps in the evolving digital ecosystem. This is expected to increase client retention, reduce client churn risk, and drive more recurring and predictable earnings over time.
Restructuring actions and cost discipline (including headcount reduction and streamlining of legacy structures) are beginning to bear fruit. As restructuring/severance costs roll off and operational savings materialize, there should be a positive impact on operating margins and cash flow generation from 2026 onward.
WPP's global scale, multinational client base, and progress in high-growth areas such as influencer marketing, e-commerce, and emerging markets position it to capture outsized share of the long-term expansion in global digital advertising and omnichannel marketing. This provides a durable tailwind for revenue and earnings growth as cyclical headwinds abate.

WPP Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming WPP's revenue will decrease by 14.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 2.7% today to 5.6% in 3 years time.
Analysts expect earnings to reach £506.1 million (and earnings per share of £0.5) by about September 2028, up from £381.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting £740 million in earnings, and the most bearish expecting £415.3 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.7x on those 2028 earnings, up from 11.1x today. This future PE is greater than the current PE for the US Media industry at 12.2x.
Analysts expect the number of shares outstanding to decline by 0.17% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.77%, as per the Simply Wall St company report.

WPP Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Prolonged organic revenue declines (minus 4.3% first half, minus 5.8% Q2) and slowing new business wins-new business running at less than half the typical rate-signal structural growth and client acquisition challenges, risking continued revenue and earnings pressure in coming years.
Persistent pricing pressure and increasingly competitive market dynamics (cited as intensified in large pitches and slow business environment) could further erode margins, particularly if efficiency gains from AI adoption are slower to materialize, impacting long-term net margins.
Ongoing organizational restructuring, severance actions, and reliance on "one-off" cost savings indicate underlying operational complexity and integration risk, which may limit WPP's ability to translate digital and AI investments into sustainable margin improvement.
Continued client spending cuts and elevated exposure to discretionary/project-based work, especially as seen in weak core sectors and regions (notably China −15.9%, UK −6.5%, broad PR and creative agency declines), raise the risk of revenue and earnings volatility linked to macroeconomic cycles and shifting client behaviors.
High competition from consulting firms, in-housing trends, and risk of disintermediation by major platforms (Google, Amazon, TikTok) threaten WPP's role in the advertising value chain, amplifying risks of further account losses, market share erosion, and pressure on both revenue and long-term margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of £4.541 for WPP based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £5.5, and the most bearish reporting a price target of just £3.5.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £9.0 billion, earnings will come to £506.1 million, and it would be trading on a PE ratio of 12.7x, assuming you use a discount rate of 9.8%.
Given the current share price of £3.93, the analyst price target of £4.54 is 13.4% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

WPP: Ongoing Restructuring Efforts Will Support Long-Term Earnings Recovery