Omnicom Group's (OMC) future and possible rerating by Morgan Stanley will depend on "improved conviction" in the durability of its revenue growth, Morgan Stanley's research division said in a note to clients Thursday.

Following Omnicom's acquisition of Interpublic Group, its plans to streamline operations are well underway, Morgan Stanley's researchers said. The researchers expect planned dispositions of lower-margin businesses, 'combined with strong initial execution on cost synergy targets,' now doubled from $750 million to $1.5 billion, 'help position the company to reach' greater than 20% adjusted earnings before interest, taxes, depreciation and amortization by 2027, above Morgan Stanley's prior 18% estimate.

Morgan Stanley's researchers have raised their 2026 and 2027 earnings per share estimates by 10% to 15% on stronger savings and buybacks, with Omnicom's planned $3 billion to $3.5 billion repurchase expected to reduce the share count by more than 10% and lift 2026 earnings above $11.50 per share.

Morgan Stanley maintained its equal-weight rating on the stock, and lowered its price target to $82 from $88.

Shares were up more than 13% in recent Thursday trading.

Price: 79.06, Change: +8.90, Percent Change: +12.69