The investment bank said that the advertising giant's strong quarter of new-business wins will not be enough to outweigh the threat of budget cuts at its biggest client Ford, which represents 7% of its revenues. WPP is due to post its results on Friday.
In a statement, Morgan Stanley said: "We believe this will have been a weak quarter for WPP, as with all the other agency holding groups, and hence do not expect CEO Sir Martin Sorrell to change his bearing stance on a protracted recovery in global advertising spend."
Sir Martin has often reiterated his belief that it will not be until 2004, with the Olympics, Euro 2004 and the US presidential elections, that there is a significant recovery in the advertising market.
Morgan Stanley warns that threats of cuts to Ford's advertising budget, as the car maker seeks to cut non-production costs by 20%, will have a bigger impact in the short term than wins such as the $340m (拢214.8m) Burger King and $50m American Chemistry Council accounts.
In the past week, shares in WPP have risen sharply, including a 21.75p rise today, an increase of 5.4% on this morning's opening price, to trade at 427p. On April 17, they were valued at 400p.
This is despite a downgrade of WPP's debt rating by the credit ratings firm Moody's last week.
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