WPP (LSE:WPP) shares have crashed an eye-watering 49% since the start of 2025. The FTSE 100 company’s been clobbered by tough conditions in the global advertising market.
Recent trading news from the communications colossus suggested things could become a lot more turbulent too. It said last week (9 July) that “against a challenging economic backdrop, we have seen a deterioration in performance” over the last quarter.
With analysts having now digested this month’s profit warning, I’m wondering what their views are on WPP’s share price and dividend prospects. I’m also considering whether now could be a good time for me to consider buying on expectations of a bounceback.
Here’s my take.
Price predicted to rise…
Interestingly, City analysts on the whole believe the Footsie company will rebound strongly from recent 16-year lows. Today 12 brokers have ratings on WPP, and their consensus opinion is that the shares should surge more than 20% from current levels around 421.9p.
In my view, these predictions are bold given high levels of uncertainty in the world economy. Thumping trade tariffs, returning inflationary pressures, and increasing geopolitical tensions all threaten to weigh on global growth and consumer spending.
Conditions are especially tough in North America, where WPP sources 38% of total sales. Recessionary risks are rising there as trade wars between the US and its major trading partners intensify, threatening to make things much worse. According to Moody’s, the chances of a US recession are now at their highest since the depths of the pandemic, at 47.6%.
…but dividends to fall?
Reflecting its current troubles, City analysts are expecting dividends at the company to fare more badly than its share price over the near term.
WPP’s kept the annual dividend locked at 39.4p per share for the past few years. But this is tipped to fall to 37.2p in 2025, before improving slightly to 37.8p in 2026.
On the plus side, though, these forecasts mean WPP’s yields are an enormous 8.8% and 9% for this year and next, respectively. To put that into context, the long-term average for FTSE 100 stocks is way back at 3%-4%.
Is WPP a buy?
City analysts might be upbeat on WPP’s share price and dividend prospects. But as someone who’s thought about buying the stock himself, I think the risks here are too great.
In theory, WPP’s deep relationships with global blue-chip clients could pay off handsomely when economic conditions improve. And over the longer term, heavy investment in digital advertising could supercharge sales as consumer habits change.
Yet I believe the risks here remain too high to consider an investment. And it’s not just because of the intensifying “macro pressures” it described in July’s profit warning. One is that the industry is highly competitive, putting sales and margins under growing pressure.
Agencies like this also face significant structural threats as more companies bring their marketing and advertising operations in-house. This has been a growing threat in recent years, but rapid improvements in artificial intelligence (AI) are accelerating this trend.
WPP shares are cheap, trading on a price-to-earnings (P/E) ratio of just 5.2 times for 2025. But even at these levels I’m not tempted to invest.
