BofA Downgrades Omnicom: IPG Deal Risks Underestimated, Growth Concerns Mount

• Bank of America downgraded Omnicom Group to Underperform, citing underestimated structural growth risks from the proposed Interpublic Group (IPG) acquisition.
• BofA cut Omnicom's price target to $77 from $87 and reduced 2026-2028 earnings estimates by 7-12%, well below consensus.
• The bank questions the combined entity's ability to sustain over 3% annual revenue growth, expecting a significant reshaping of Omnicom's business mix.
• Up to 15% of pro forma revenue (assets) may be sold post-merger, but buyer appetite could be limited, potentially leading to closures without meaningful value.
• IPG's recent margin gains may stem from underinvestment, requiring Omnicom to increase spending, which could dilute near-term profitability.

Why It Matters: BofA warns Omnicom's IPG acquisition faces significant growth and integration challenges, leading to a downgrade.