Publicis Earnings: Strong Revenue Growth Leads to Improved Outlook; Increasing Fair Value Estimate

Narrow-moat-rated Publicis delivered another solid quarter. While revenue growth met FactSet consensus expectations, the outlook was improved. As we predicted last quarter, with another strong quarter of a growth in the books, a raise to the full-year outlook was likely to happen. Management had guided to organic revenue growth of 4%-5% for the year and raised that outlook to 5%-6% organic growth after seeing growth of 5.6% in the current quarter. Management maintained its full-year outlook for an 18% operating margin. We were already expecting results to trend toward the higher end of the previous guidance range, but after current results we are slightly raising our growth outlook. We now forecast 5.8% annual organic growth, up from 4.8%, and we are raising our fair value estimate to EUR 104 from EUR 100. Shares were trading at our fair value heading into earnings, and we continue to view shares as fairly valued after our update. Interestingly, management left the door open for growth to accelerate further in the second half of 2024. We would read this as an expectation that growth will trend toward the higher end of the 5% to 6% range.