Buy signal on Publicis (PUB-FR)

14/12/2020

We had an Enter Long signal on December 14th 2020, triggered by our system on PUB-FR, Publicis the French Media Company.

Publicis is a €10 Bn market cap and is the third largest communications group. It operates in the digital, technology and consulting areas with Publicis Sapient (Sapient Consulting, SapientRazorfish and DigitasLBi), in advertising, interactive communication, digital marketing, public relations, corporate communications and events with Publicis Communications (Publicis Worldwide, Leo Burnett, Saatchi & Saatchi, Fallon, BBH, Marcel, MSL et Prodigious), in media buying and media strategy with Publicis Media (Starcom, Zenith, MediaVest, I Spark et Blue 449), and in healthcare communications with Publicis Health (Publicis Healthcare Communications Group ; PHCG).

Publicis acquired Epsilon in 2019 in a $4.5B cash deal,that was cautiously received by the market as in 2015, Publicis acquired Sapient for $3.7B but had to record an impairment charge of approximately half that amount less than two years after the acquisition. However, the Epsilon integration seems to be going well this time, with encouraging results despite the covid crisis, including strong cash-flow generation and deleveraging in process.

Publicis has cut the dividend due to the health crisis but the current yield is still attractive at 4%.

Publicis is expected to post a €9.8bn revenue in 2020, flat versus 2019 coupled with a €700m net profit (-17% yoy)

Short term catalyst: Epsilon integration, deleveraging, dividend yield.

This signal looks consistent with the Major Bullish trend in the European Media sector.