We recently maintain our Neutral recommendation on Dublin, Ireland-based advertising titan, WPP Group Plc. (WPPGY - Analyst Report).

The company over time has been acquiring or investing in businesses across the world; all aimed at expanding the company’s operations in fast growing emerging markets and enabling access to vast untapped markets in those regions.

In 2011, WPPGY made a number of acquisitions with roughly 24 in new markets, 32 in new media and 8 in consumer insight. In the first quarter 2012, roughly 10 acquisitions in new markets, 2 in consumer insight and 2 in other areas were carried out. These strategic acquisitions represent a major competitive advantage for the company and enhance its creative reputation and co-operation among the Group companies.

First quarter 2012 was good for the company; a trading update for the quarter revealed roughly a 7.6% revenue growth on the back of strength across all geographical regions and communication services sector. On a constant currency basis, revenue grew by 7.4%.

For the full fiscal year 2012, management expects revenue growth, excluding the impact of acquisitions and currency fluctuations, to be over 4%. Operating margins are expected to improve by 50 basis points. Over the longer term, management expects above-industry average revenue growth, 0.3 points or more annual improvement in staff cost/revenue ratio and 0.5 margin points or more improvement in operating margin. PBIT is expected to improve by 10%-15% p.a. on the back of margin growth and benefits from small and medium-sized acquisitions.

However, a competitive and fragmented advertising/communication industry with risks of losing market share and foreign exchange fluctuations ever lurking in the scenario is a matter of constant worry for the company. This advertising and communications services provider competes with other industry players including Interpublic Group of Companies Inc. (IPG - Analyst Report), Omnicom Group Inc. (OMC - Analyst Report) and Publicis Groupe SA (PUBGY.PK).

Also, the company’s international operations expose it to the risks of local legislation and unstable political conditions. Furthermore, excessive dependence on a few large clients also makes the company more vulnerable to loss of business.

The current Zacks Consensus EPS Estimates for WPP plc are $5.67 and $6.32 for the fiscal years 2012 and 2013, respectively. The estimates represent a year-over-year growth of 5.39% for 2012 and 11.54% for 2013.

The stock also bears a Zacks #3 Rank, implying a short-term (1-3 months) Hold rating.