Despite fresh U.S. tariffs weighing on consumer spending and squeezing marketing budgets, Citi is doubling down on the U.S. advertising sector, calling the upcoming Omnicom-Interpublic merger a compelling long-term play.
Short-Term Drag from Tariffs
Citi analysts acknowledged that tariff pressures are expected to reduce advertising spend:
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📉 6% below pre-tariff estimates in 2025
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📉 5% lower in 2026
As a result, they cut revenue forecasts by 3% for both Omnicom (NYSE: OMC) and Interpublic (NYSE: IPG):
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Omnicom’s organic growth forecast: +1% in 2025
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Interpublic’s organic growth forecast: -3.5% in 2025
Both are below company guidance and Street consensus.
Why Citi Is Still Bullish
Despite soft near-term forecasts, Citi resumed coverage with Buy ratings on both ad giants. The key reasons?
✅ Deep Undervaluation
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Pro forma Omnicom-IPG is trading at just 9x 2026 EPS, a level last seen during the 2008 financial crisis.
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Citi sees potential EPS of $8.26 in 2026, rising to $9.42 in 2027, supported by $750 million in cost synergies.
✅ Global Diversification
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A significant chunk of revenues are generated outside the U.S., softening the impact of domestic tariff-induced slowdowns.
✅ Post-Merger Upside
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The combined entity will have greater scale, deeper tech stacks, and improved digital/data capabilities.
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Better equipped to help clients navigate complex marketing environments.
💬 “We believe the pro forma firm will be better positioned to service clients than either standalone firm,” Citi noted.
Valuation Targets
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🎯 Omnicom (OMC): Target price of $103
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🎯 Interpublic (IPG): Target price of $35
(Based on projected merger conversion terms)
Related Data Sources for Deeper Insights
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Bulk Ratings API
Track updated analyst ratings and sentiment shifts post-coverage initiation.
🔗 Bulk Ratings -
Company Rating API
Monitor how overall company fundamentals and financial health evolve post-merger.
📊 Company Rating
Bottom Line
Even with a dimmer outlook for U.S. advertising spend, Citi believes the Omnicom-Interpublic merger offers rare value. For investors with a medium- to long-term horizon, the sector may still deliver — thanks to global exposure, operational synergies, and digital transformation tailwinds.
