MediaWatch – One step forward, two steps back

The glimpses of positivity that we reported in the first half of 2024 have not heralded a bright new dawn and market expectations of substantive growth and margin improvement have again been pushed out. One step forward, two steps back. The story is a familiar one: unsettled geopolitics and pressure on household budgets are tempering consumer spending, with a consequent impact on corporate marketing and advertising spending. The macroeconomic unanswered questions and a lack of clarity on how AI will affect business models and practices are producing an ongoing hiatus in larger digital transformation projects. These are still in the wings, but conversion cycles are long. Our analysis highlights stocks trading below their long-term average ratings in the UK, Continental Europe and North America. We include a further screen that gives some indication of relative value, by comparing prospective EV/sales multiples (including leases) with EBITDA margin. The clear majority of stocks covered here look attractive on this basis, and when sentiment shows more robust improvement, we would expect these discounts to narrow relatively quickly.