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.