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The FTSE 100 and FTSE 250 indexes have both printed solid gains since 1 January. But some big name UK shares haven’t fared nearly as well.
Footsie-listed communications giant WPP (LSE:WPP), for instance, has slumped 52% in value since the beginning of 2025. And 233-year-old retailer WH Smith (LSE:SMWH) has plummeted 40% over the period.
Both companies have their problems, as I’ll explain soon. Yet City analysts are expecting their share prices to rebound sharply over the next year. Should investors consider buying them as potential recovery plays?
Accounting disaster
WH Smith shares were pootling along in 2025 until a seismic market update shocked investors last month. In it, the retailer said trading profits for the last year (to August) had been overstated by around £30m in its North America division.
It attributed this to “the accelerated recognition of supplier income“, and subsequently slashed regional profit forecasts from £55m to £25m.
That’s a pretty painful financial hit. But what’s more damaging is the reputational damage it’s done to the firm’s management. Given that the error also occurred in North America — a key plank of its worldwide expansion strategy — it’s no shock to see investors charge for the exits.
Does this drop make WH Smith shares an attractive dip-buy for long-term investors to consider? I’m not so sure. That’s even though City analysts expect the company’s share price to rebound 16% over the next year.
I’ve long discussed WH Smith’s exciting growth strategy, as it ramps up global expansion in travel hubs like airports and train stations. The recent sale of its beleaguered high street operations has put it in better shape to seize this opportunity too.
But with auditors undertaking a comprehensive review of the company, I’m happy to sit on the sidelines for now. I fear something coming out of the review could send its shares even lower.
Profit warning
WPP’s share price decline has been far less sudden. A series of chilly trading updates have seen it steadily decline in 2025, reflecting the impact of weak client spending.
In July, the company actually cut its full-year profit forecasts. Reflecting “a challenging trading environment with macro pressures intensifying and lower net new business“, WPP said like-for-like revenues (excluding pass-through costs) would drop 3-5%. That was down from a prior forecast of flat to a 2% sales drop.
But could things be looking up as interest rates fall, potentially stimulating client activity? City analysts think so, and they forecast WPP’s share price will rebound 17% over the next 12 months.
I’m not convinced however. And that’s not just because of the highly uncertain economic outlook. WPP’s facing major structural threats too as companies steadily bring their advertising and marketing activities in-house to cut costs. It’s a trend that’s actually accelerating as the use of artificial intelligence (AI) becomes more widespread.
What’s more, WPP’s losing ground to the competition, and this year alone has lost several major clients like Mars and Coca-Cola. On balance, I think share pickers should consider avoiding the FTSE 100 company and seek out stronger stocks to buy.
