Market analysts now see Martin Sorrell’s S4 Capital as a tech play rather than a global advertising group with more than half its revenue from the sector.
Investment bank Jefferies, in a note to clients, says the correlation is closer to tech platforms Google and Facebook rather than ad industry holding companies.
S4 Capital is a self-described new age/new era digital advertising and marketing services company on track to double in size by 2021.
“S4's share price is now highly correlated with its largest client base, tech platforms,” say the analysts.
“S4's investment thesis is clearly resonating in a backdrop of accelerating digital transformation.
“Feedback from CMOs is the step change in digital will stick, and we think S4 is ideally positioned to help partners deliver in this new normal.”
Jefferies says S4 is involved in several potentially game-changing pitches.
“S4 is taking share from peers, as clients look to pivot physical projects to digital,” write the analysts.
The company’s subsidiaries, MightyHive and MediaMonks, are at the forefront of helping to shape CMO strategy.
Sorrell expects a V shaped recovery after the pandemic. The founder of WPP, the world's biggest advertising group, sees the second quarter of 2020 difficult, the third quarter less so but then a recovery in the final three months of the year.
“We continue to think that S4 is ideally positioned with its integrated global data + content + programmatic (Holy Trinity) model to benefit from a backdrop of accelerated digital transformation,” say the analysts.
“We think the below chart highlights increasing investor understanding of the key drivers of growth for S4.
“We also think is shows S4's investment story is resonating in a COVID-19 backdrop of accelerating digital transformation.”
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