In a report released on May 9, Cameron McVeigh from Morgan Stanley maintained a Hold rating on Stagwell (STGW – Research Report), with a price target of $8.00.
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Cameron McVeigh has given his Hold rating due to a combination of factors influencing Stagwell’s current market position. The company’s recent financial results showed a modest improvement over estimates, with net revenue growth and adjusted EBITDA margins slightly surpassing expectations. However, total revenue experienced a decline primarily due to reduced advocacy-related billing costs, which raises some concerns about the sustainability of revenue streams.
Despite these challenges, Stagwell’s strategic initiatives, such as the growth in the Stagwell Marketing Cloud Group, indicate potential for future expansion. The company’s reiterated guidance for FY25 suggests confidence in achieving long-term goals, but macroeconomic uncertainties and potential reductions in marketing budgets pose risks. Given these mixed signals, McVeigh maintains a cautious stance with a Hold rating, reflecting both the potential upside and the risks associated with the current market environment.
In another report released on May 9, Benchmark Co. also downgraded the stock to a Hold with a $9.50 price target.