Advertising firm S4 Capital (SFOR) – led by WPP (WPP) founder Martin Sorrell – gained 2% to 570p on a confident first quarter update.

The company upgraded its annual guidance after its first-quarter gross profit jumped 71% as acquisitions boosted sales.

Separately it announced that it had acquired Brazilian digital performance agency Raccoon, for an undisclosed sum.

Gross profit for the three months through March increased to £104 million, which the company said represented growth of 33% on both a like-for-like and pro-forma basis.

‘STRONGER SECTOR-LEADING’ GROWTH

Looking forward, the company said it would now target ‘even stronger sector-leading’ 30% like-for-like revenue and gross profit growth, up from 25% previously, and a strong operating margin in 2021. The company also announced plans for a new bond issue to help fund its buy-and-build strategy – with the company targeting firepower of £500 million.

Executive chairman Sorrell commented: ‘We are extremely optimistic about our prospects for this year and next, given the huge global fiscal and monetary stimulus introduced to counter the impact of the pandemic and the subsequent increase in consumer savings ratios and stagnation of corporate capital investment.’

Numis analyst Steve Liechti commented: ‘S4 momentum remains good; we see a nice play on digital/data-led growth trends in marketing given its blank sheet focus and experienced management.’

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account.

Issue Date: 04 May 2021