J.P Morgan Comments On Omnicom Group Following Earnings; Raises PT

Upside to revenue not enough to boost Omnicom Group's OMC shares as margin concern weighs on stock. The impressive 10% organic revenue growth in Q4 was not enough to rally shares which have performed well YTD, up almost 10% vs. the S&P up 5.6%, as margin expansion was limited in the quarter. J.P Morgan looks for 6.8% organic revenue growth in Q1 and early signs of margin expansion as the company begins to work its way back to it's 13.4% EBITA guidance for 2012. Divestitures of underperforming business, consolidation in international real estate and IT functions, and a more normalized increase in compensation expense are all likely to drive better profitability. With above average growth expected over the next two years given the healthy ad market and projected margin expansion, J.P Morgan sees this as an excellent time to own OMC shares. The stock trades at a slight discount to its historic premium to the S&P despite projected growth on the higher end of its historical average. J.P Morgan has an Overweight rating and $55 PT on OMC OMC is trading higher at $50