Dresdner raised its rating on the French advertising group to "buy" from "reduce" on the back of what it said were encouraging industry-related and company-specific news, as well as microeconomic factors.
Publicis remains the investment bank's top advertising stock and it said it remained cautious on other players in the sector.
The bank set a target price for Publicis stock, which is currently trading at €29, of €35. It said Publicis shares were trading at an unjustified discount to its closest Anglo-Saxon peer.
Earlier this week Publicis, the world's sixth-largest advertising group, offered an "extremely cautious" outlook for 2002, but remained confident it could reach its revised targets for 2001.
Publicis started 2001 -- a year chairman Maurice Levy described recently as "Chinese water torture" -- with organic revenue growth targets of 7%, before readjusting forecasts to 5%. After the events of September 11, the target fell further to 3%-3.5%.
Levy said he was confident the group, which owns agencies Saatchi & Saatchi and Publicis, will hit its expected 17% earnings before interest, taxes, depreciation and amortisation margin.
Yesterday, Publicis announced it planned to raise as much as £372m through a bond issue, which it says it will use to reduce debt and cut financing costs. However, the market saw the possibility that the funds could be used to make a takeover bid for the ailing Cordiant, which has spent the last 12 months issuing profit warnings and making 1,100 staff redundant. Cordiant is believed to be worth around £420m at the moment.
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