Citi: Advertising Sector Still Attractive Despite Tariff Headwinds

Despite fresh U.S. tariffs weighing on consumer spending and squeezing marketing budgets, Citi is doubling down on the U.S. advertising sector, calling the upcoming Omnicom-Interpublic merger a compelling long-term play.

Short-Term Drag from Tariffs

Citi analysts acknowledged that tariff pressures are expected to reduce advertising spend:

• 📉 6% below pre-tariff estimates in 2025

• 📉 5% lower in 2026

As a result, they cut revenue forecasts by 3% for both Omnicom (NYSE: OMC) and Interpublic (NYSE: IPG):

• Omnicom's organic growth forecast: +1% in 2025

• Interpublic's organic growth forecast: -3.5% in 2025

Both are below company guidance and Street consensus.

Why Citi Is Still Bullish

Despite soft near-term forecasts, Citi resumed coverage with Buy ratings on both ad giants. The key reasons?

✅ Deep Undervaluation

• Pro forma Omnicom-IPG is trading at just 9x 2026 EPS, a level last seen during the 2008 financial crisis.

• Citi sees potential EPS of $8.26 in 2026, rising to $9.42 in 2027, supported by $750 million in cost synergies.

✅ Global Diversification

• A significant chunk of revenues are generated outside the U.S., softening the impact of domestic tariff-induced slowdowns.

✅ Post-Merger Upside

• The combined entity will have greater scale, deeper tech stacks, and improved digital/data capabilities.

• Better equipped to help clients navigate complex marketing environments.

💬 "We believe the pro forma firm will be better positioned to service clients than either standalone firm," Citi noted.

Valuation Targets

• 🎯 Omnicom (OMC): Target price of $103

• 🎯 Interpublic (IPG): Target price of $35
  (Based on projected merger conversion terms)

Related Data Sources for Deeper Insights

• Bulk Ratings API
  Track updated analyst ratings and sentiment shifts post-coverage initiation.
  🔗 Bulk Ratings

• Company Rating API
  Monitor how overall company fundamentals and financial health evolve post-merger.
  📊 Company Rating

Bottom Line

Even with a dimmer outlook for U.S. advertising spend, Citi believes the Omnicom-Interpublic merger offers rare value. For investors with a medium- to long-term horizon, the sector may still deliver — thanks to global exposure, operational synergies, and digital transformation tailwinds.