< The 2014 All-Europe Research Team
Filippo Lo Franco, 44, and his five-member J.P. Morgan Cazenove team have ruled this roost since 2010. The London-based analysts cover 39 stocks and are considering adding more names this year. They maintain an overweight stance on this sector, whose shares surged 38.6 percent last year and led the broad market by 20.5 percentage points — marking the fourth straight year Europe’s media segment has outperformed, Lo Franco notes, “the first time it has done so since 1974.” That trend will continue this year, “subject to macro,” he says, “as the European advertising cycle is still at trough levels and the accelerating digital revolution requires more content and more data analysis as hardware [and] networks are commoditized.” Two advertising agencies that continue to hold the group’s favor, France’s Publicis and England’s WPP, were added to J.P. Morgan’s selected list in June, each with an overweight rating. “No longer constrained by traditional [advertising and promotion] budgets,” Lo Franco explains, “ad agencies now have access to CIO-managed, multitrillion-dollar information technology budgets.” The researchers estimate that that market for IT spending “could be worth a massive $3 trillion,” he reports, which could drive earnings-per-share growth for Publicis and WPP by 10 to 15 percent over the next few years and propel reratings “to at least historical multiples — 15 to 16 times.” From the June selection through year end, WPP’s stock jumped 26.4 percent, just ahead of the Publicis shares’ 26 percent gain. Over the same period the sector climbed 23.6 percent. See also Filippo Lo Franco’s profile in the 2013 All-Europe Research Team and 2012 All-Europe Research Team. |
