WPP Plc. (WPP) saw its stock rise as high as 6.4% on Wednesday before tapering down to a 3.61% gain in late afternoon trade in London. European stocks as a whole have rallied on the week. Bank stocks have rallied the most, and the Stoxx Europe 600 is up 0.37% on the day.
Banks rallied on optimism in the long-term.
WPP rallied on the day to be one of the top gainers in early morning trade. The company overcame pressure from falling commodity prices, according to a recent announcement from the company.
Three reasons for WPP’s rally are:
1. Weak Pound Lifts Profits
WPP is the largest advertising company in the world, and the company has been a rare benefactor of Brexit. WPP stock rose as a result of Brexit. Profits before taxes and interests rose to 769 million pounds, up 15% in the first six months of the year, according to the report.
Revenue during the same six-month period ended June 30 rose to 6.5 billion pounds, up 12%.
2. 10% Rise in Profits Before Interest and Taxes in Constant Currency Terms
In terms of constant currency, the company’s underlying profits would have risen by 10% before interest and taxes. The figure points to a weaker pound helping the ad company experience growth in the first half of the year.
Analysts pegged the company’s revenue at 754 million pounds, much lower than the 769 million pounds posted by the company.
3. Confirmation in Guidance and Transparency
The report confirms the company’s full year guidance. Investors remained uncertain pre-Brexit, which had an impact on the company, according to Chief Executive Officer Martin Sorrell. The company has not been impacted since Brexit.
The company did note that U.K. spending fell in April, May and June. U.K. spending accounts for 14% of the company’s revenue.
U.K. spending rebounded in July, according to a statement made by Sorrell.
