WPP Group (WPP) reported solid third-quarter results that show organic revenue growth is decelerating. We remain comfortable with our fair value estimate and believe the shares are undervalued despite the recent run-up in the shares. We had anticipated top-line declaration in the second half given tough comparisons versus the prior year. Most corporate advertising and marketing spending is planned on a calendar-year basis, so we'd expect any material pullback in spending to be deferred until 2012. We anticipate lower growth next year given the possibility of a weaker macroeconomic environment. However, the level of top-line growth in 2012 remains the wild card for all the ad agencies and we're currently assuming low-single-digit growth on average for the three ad agency holding companies in our coverage universe.
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