Investec has maintained its 'buy' rating for media and advertising giant WPP but has put its 950p target price under review after a disappointing third-quarter trading update on Thursday.

"3Q IMS is disappointing with slower US/Europe but also Emerging markets. The latter is expected to bounce back but other areas may stay tough, so numbers reduce slightly," said analyst Steve Liechti.

WPP, run by frontman Sir Martin Sorrell, said that third-quarter reported sales increased by 1.6% while like-for-like (LFL) growth was 1.9%. Investec said that this was below the 5% and 1.9% rises expected, respectively.

The broker now expects full-year LFL sales growth of 2.5-3%, compared with 3.5% previously, as the fourth quarter is expected to be softer in North America, Europe and Latin America, while Asia Pacific is improving.

Nevertheless, Liechti said: "Shares likely to be weaker today but international marketing growth story remains, so a buying opportunity could emerge."

On valuation terms, Investec believes that the shares are not expensive by historical standards but reflect the tougher current macro-economic environment; the stock trades at around 11 times full-year earnings.

As Liechti predicted, the share price was under pressure in morning trade, with the stock down 2.17% at 790.43p by 09:59.

BC

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