WPP Shares Upgraded by Barclays Despite Weak 2026 Guidance

WPP shares (LON:WPP) are 6.41% lower this morning at 265.70p, even as Barclays upgraded the advertising giant from Underweight to Equal Weight, raising its price target from 250p to 300p.

The downgrade in market sentiment came despite the broker's more constructive view, reflecting ongoing concerns about the company's near-term outlook and a challenging operating environment that has weighed heavily on the stock.

The upgrade from Barclays marks a notable shift in tone toward the world's largest advertising group, with the broker citing recent account wins as evidence that WPP's media business remains competitive and “is not broken.”

The firm acknowledged that while the company's recent investor day presentation “did not break new ground,” the strategic direction outlined was “sensible” and provided a credible path forward. However, Barclays cautioned that WPP needs to demonstrate improving organic momentum before it can be considered “out of the woods,” tempering enthusiasm with a dose of realism about the road ahead.

The backdrop to this reassessment is a sobering set of financial results and guidance that have rattled markets. WPP reported a 71.2% decline in reported operating profit for 2025, falling to just £382 million from £1.33 billion the previous year. The sharp drop was driven primarily by £641 million in goodwill impairments, a significant non-cash charge that reflects diminished valuations of past acquisitions. Revenue fell 8.1% to £13.55 billion, while revenue less pass-through costs, a key metric closely watched in the advertising industry, declined 5.4% on a like-for-like basis.

More concerning for markets is the company's 2026 guidance, which projects an organic revenue decline of 5% to 6%, a stark contrast to consensus expectations that had anticipated 3% growth. WPP expects a mid- to high-single-digit percentage decline in like-for-like revenue less pass-through costs during the first half of 2026, with some improvement anticipated in the second half. Headline operating profit margin is forecast to land between 12% and 13%, reflecting continued pressure on profitability as the company navigates a difficult transition period.

In response to these challenges, CEO Cindy Rose has unveiled the Elevate28 strategic plan, a comprehensive restructuring initiative designed to simplify WPP's organizational structure and drive efficiency. The plan consolidates operations into four core units: WPP Media, WPP Creative, WPP Production, and WPP Enterprise Solutions, operating across four regions. Management is targeting £500 million in annualized cost savings and has committed to portfolio rationalization to unlock shareholder value. The strategy aims to stabilize the business in 2026, return to organic growth in 2027, and achieve what the company terms “high-quality growth” by 2028.

Adding a note of institutional confidence to the picture, BlackRock disclosed on February 18 that it had increased its voting stake in WPP to 10%, up from a previously notified 9.96%. While the increase is marginal, it signals continued backing from one of the world's largest asset managers at a time when the company faces significant headwinds.

The share price decline reflects the tension between cautious optimism from analysts and the harsh reality of near-term underperformance. Markets appear to be pricing in the risk that WPP's turnaround may take longer than hoped, with execution challenges and macroeconomic uncertainty clouding the outlook.

The Barclays upgrade suggests that valuation has become more attractive and that recent wins demonstrate underlying franchise strength, but the path to sustained recovery remains uncertain and dependent on tangible evidence of organic growth returning to positive territory.