Stagwell is a stock that shouldn’t be overlooked as digital marketing gains favor, Goldman Sachs said. Analyst Brett Feldman initiated coverage of the stock at a buy. His $12 price target implies an anticipated upside of 62.4% from Friday’s close. Shares jumped more than 9% in early trading Monday. Stagwell, which focuses on creative and digital marketing, is up about 19% this year. STGW 1D mountain Stagwell stock Stagwell is expected to benefit from long-term growth in digital advertising and marketing spend globally, Feldman said. Digital advertising spending is expected to grow faster than total spending in the space through the end of 2026. “Specifically, we expect STGW will continue to benefit from secular tailwinds to digital advertising spend,” he said. The company has a higher share of digital revenue compared with traditional ad agencies, at around 60% versus 30%. Feldman also said the company has low market share and faster organic revenue growth than traditional peers. These three stats also make Feldman optimistic on Stagwell’s long-term growth outlook. Additionally, Stagwell has a strong balance sheet with cash flow that allows for strategic options and financial flexibility, he said. After crunching the numbers, Feldman estimated the company could double the size of its asset portfolio through mergers and acquisition using just cash on hand. If going another direction, the company could return its whole market cap to shareholders through dividends or buybacks over the next five years using the same sum. The company also has an attractive valuation with the potential for multiple expansion over time, Feldman said. The $12 price target is based on a multiple that could end up being conservative, he said, as there’s potential to grow more if it can win larger contracts and keep an above-average growth profile. Feldman’s buy rating puts him out of step on Wall Street, with the majority of analysts having hold ratings on the stock, according to Refinitiv. — CNBC’s Michael Bloom contributed to this report.
