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Omnicom Group Inc. Message Board

  • investora2z investora2z Aug 29, 2013 6:17 AM Flag

    Article on SA

    An article on seekingalpha has recommended to buy Omnicom. The author expects the good effects of the merger with Publicis to have a positive impact on the earnings of the company. Omnicom is likely to benefit from the rising demand for digital marketing, and the merger will establish it as a leading media and communication company in the world. Omnicom will be able to enhance its digital capabilities, which will have positive effects on other aspects of its business. The last earnings of Omnicom indicated the potential of the emerging markets. The company posted growth in revenues and net income mainly due to better growth in countries like China and India. The articles mentions that expansion in Asian and Latin American countries will help the company improve its EPS by around 7.3% to $3.86 per share this year and $4.27 next year. Further, the synergies between the two companies will help Omnicom gain access to other segments of the dynamic advertising field. Online advertising is a fast growing field, with younger segments like social media sponsorship / native advertising having tremendous potential. IZEA (IZEA), a company active in this space, recently posted record numbers. The merger may also have negative fallouts as the combined entity is likely to lose some big clients. This is because the two companies are currently servicing rival companies. For example, Omnicom serves PepsiCo (PEP), AT&T (T), and Microsoft (MSFT), while Publicis serves Coca-Cola (KO), Verizon (VZ), and Google (GOOG). The real impact will be known only in due course. Meanwhile, the stock continues to correct, and is down by more than 14% after the earnings. It is important that there is a rebound soon otherwise the correction may run much deeper. The long term performance of Omnicom has been good. The exact impact of the merger will be an important factor going forward.

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