Omnicom Divests ICON International; Shares Rise

Omnicom Media Group, a unit of Omnicom Group (OMC), divested its specialty media company ICON International to the latter’s management team for an undisclosed amount. Shares rose 1% to close at $83.81 on June 11.

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Omnicom Group is a global media, marketing, and corporate communications holding company. (See Omnicom stock analysis on TipRanks)

John Wren, the company’s Chairman & CEO, said, “I want to thank the management team and employees of ICON for their years of commitment to Omnicom and wish them continued success.”

The company is undergoing a realignment in its portfolio of businesses, and the sale of ICON is a part of its strategic plan and investment priorities.

According to the management, the sale does not have any material impact on the company’s ongoing operating income for FY 2021.

Divestitures will be limited going forward and the company will focus on acquisition opportunities in precision marketing, digital transformation, and commerce, media, and healthcare.

On May 3, Macquarie analyst Tim Nollen stated in a research note that he believes a “cyclical rebound” is taking place in the advertising sector along with “new business growth spurring consumer demand and hence ad demand.”

Having an overall positive stance on the sector, the analyst upgraded the stock to a Buy rating and lifted the price target to $93 (from $76) which implies 11% upside potential to current levels.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 3 Buys and 2 Holds. The Omnicom average analyst price target of $89 implies 6.2% upside potential to current levels. Shares have gained 48.8% over the past year.