In a report released today, Cameron McVeigh from Morgan Stanley maintained a Hold rating on Stagwell (STGW – Research Report), with a price target of $8.00.
Cameron McVeigh’s rating is based on a combination of factors that highlight both the potential and challenges faced by Stagwell. The company has shown significant growth in its tech vertical, with a notable increase in revenue driven by AI-related digital transformation. This positive shift is expected to continue, supported by record net new business wins and a reacceleration in tech spending anticipated for 2025.
However, despite these promising developments, Stagwell’s ongoing investments, particularly in the Stagwell Marketing Cloud, are likely to impact margins in the near term. Additionally, while there is potential for growth if new business wins translate into revenue, the historical conversion of these wins has been unclear. The company’s current premium valuation compared to its peers may also limit share performance unless it can consistently deliver strong results.