What Happened?
Shares of global advertising conglomerate Interpublic Group (NYSE: IPG) jumped 3.3% in the morning session after a peer company, Omnicom (OMC), received an analyst upgrade from Wells Fargo tied to the nearing completion of its merger with Interpublic.
The move on Omnicom's stock appeared to create positive sentiment for Interpublic as well. Wells Fargo upgraded Omnicom to Overweight from Equal Weight, raising its price target to $91 from $78. The analyst noted that the stock’s potential upside was compelling as the merger with Interpublic Group approached its close. This suggests growing confidence in the strategic benefits of the combination. The bank's research note also pointed to long-term strength in the media advertising sector, dismissing some long-held concerns about the industry's future. Investors seemingly interpreted the positive outlook for the combined firm as a good sign for Interpublic ahead of the deal's finalization.
After the initial pop the shares cooled down to $26.25, up 2.9% from previous close.
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What Is The Market Telling Us
Interpublic Group’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock dropped 2.5% on the news that markets pulled back, reversing early gains, as investor sentiment remained cautious despite a softer-than-expected inflation reading.
Stocks rose in the morning session after an unexpected drop in the Producer Price Index (PPI) for August signaled easing inflation and raised expectations for a potential Federal Reserve interest rate cut. The U.S. Bureau of Labor Statistics reported that the PPI, which measures wholesale prices, edged down 0.1% last month, contrary to analyst expectations for a 0.3% rise. This data gives the Federal Reserve more flexibility to consider lowering interest rates to stimulate the economy.
Interpublic Group is down 6.7% since the beginning of the year, and at $26.25 per share, it is trading 18.1% below its 52-week high of $32.06 from October 2024. Investors who bought $1,000 worth of Interpublic Group’s shares 5 years ago would now be looking at an investment worth $1,621.
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