Media and advertising giant WPP was performing well on Wednesday morning after Jefferies upgraded its rating for the stock from 'hold' to 'buy'.

The broker said that an analysis WPP's largest clients and their 2013 ad budgets "looks encouraging" and "with expectations low, we see upside risk".

Consumer products group Unilever lifted its ad budget by €500m (+8.3%) in 2012 but still managed to beat expectations with its full-year results last week. Furthermore, the company - along with sector peer Procter & Gamble - said that it would continue to invest in 2013.

"In aggregate, the tone is increasingly optimistic and WPP looks particularly well placed given specific commentary from its largest clients."

Jefferies reckons that WPP's organic growth guidance of 2-3% for 2013 "seems conservative", especially given the business's exposure to emerging markets and China.

"Additionally, we see cash returns rather than acquisitions increasingly the focus for 2013 following 2012's transformational M&A."

The broker has hiked its target price for the stock from 800p to 1,150p, saying that the new target would put WPP on a price-to-earnings ratio of 13, in line with its global peers.

Shares were up 2.30% at 1,000p by 09:48.

BC

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