Earnings preview: Omnicom Group Inc.

OVERVIEW: Shares of the Omnicom Group Inc. are hovering at a two-year low due to concerns about weakened advertising spending as the economy slows.

Citigroup cut its U.S. advertising growth forecast to 0.2 percent in 2008 from 3.1 percent. It said the growth in online ad spending--projected at 16 percent--and the boost expected from ads related to the presidential campaign and the Olympics won't offset weakness in local ads. Ad spending on newspapers is forecast to fall 12 percent, radio 5 percent, magazines 3 percent and yellow pages advertising by 2 percent.

BY THE NUMBERS: Analysts surveyed by Thomson Financial on average expect Omnicom to post earnings of 96 cents per share on revenue of $3.45 billion.

ANALYST TAKE: Citigroup analyst Catriona Fallon expects Omnicom to post earnings in line with expectations but remains cautious on the outlook for the fourth quarter and 2009. She expects Omnicom to report revenue of $3.49 billion, up 11.6 percent from a year ago, propelled by international growth. But Fallon thinks the stock will continue to be pressured by weak ad spending.

JPMorgan analyst Alexia Quadrani expects earnings of 95 cents, reflecting higher international revenue growth.

WHAT'S AHEAD: Fallon sees Omnicom as a core media holding for investors but no catalysts in the near term to jump-start its stock. Quadrani said Omnicom's diversified businesses and international presence will buoy earnings, as U.S. growth remains solid if vulnerable. The New York-based company's wins at the Cannes International Advertising Festival in June will help land future advertising accounts.

STOCK PERFORMANCE: Shares of Omnicom fell 10 cents to close at $42.32 on Monday, down 11 percent for the year to date. During the past 52 weeks, the stock has fallen from a high of $55.45 in May to a low of $39.77 in July.