On Wednesday, Stifel adjusted the price target for Accenture plc (NYSE:ACN) to $340 from the previous $395 while maintaining a Buy rating on the stock. The firm's third-quarter earnings per share (EPS) are expected to be announced before the market opens on June 20, 2024. The company's Chief Financial Officer (CFO) is set to retire, with a well-known internal candidate being promoted to fill the position.
The cautious stance from tier-1 service providers and front-office software vendors continues, and the macroeconomic environment is described as flattish since the second-quarter (February) report released in late March. The post-close mixed results from Oracle (NYSE:ORCL) tonight also add to the cautious outlook.
Stifel anticipates an incremental 50 basis point revenue headwind from foreign exchange (FX) effects for fiscal years 2024 and 2025. While the consensus for third-quarter earnings remains in line with guidance, Stifel has lowered its fourth-quarter and fiscal year 2025 estimates (August) due to a sluggish macroeconomic environment, although solid bookings and positive commentary on artificial intelligence (AI) are expected.
The firm has revised its fourth-quarter revenue growth estimate to 3.5% in constant currency (cc), which is below the consensus of 4.0-4.5%. For fiscal year 2025, revenue growth is estimated at 4.5% cc, down from 5.5% previously and below the consensus of 6%. However, margin assumptions remain unchanged, with an increase of 10 basis points for fiscal year 2024 and 20 basis points for fiscal year 2025.
Stifel's analysis suggests that there is no evidence of Accenture losing market share or AI displacing workloads. Current data points are largely cyclical, with some incremental pause as enterprises map out their AI strategies and budgets. Accenture's acquisition activity is seen as a positive indicator, though it may primarily reflect a need for reskilling.
Accenture's stock trades at a 12% premium to the equal-weight S&P 500 EPS, compared to a historical average of around 30%, indicating cyclically depressed growth and potential for downward estimate revisions. Despite acknowledging the risks associated with potential estimate revisions, Stifel continues to like the stock.
In other recent news, Accenture is experiencing a flurry of activity, with Deutsche Bank maintaining a Hold rating on the company's shares and a steady price target of $295.00. The firm projects third-quarter fiscal year 2024 revenues of approximately $16.56 billion and earnings per share of $3.17. Deutsche Bank also anticipates a downward adjustment in Accenture's full-year 2024 revenue growth forecast.
On the other hand, TD Cowen has adjusted its outlook on Accenture, reducing the price target from $350.00 to $294.00 due to concerns about a slowdown in enterprise spending. Meanwhile, BofA Securities also revised its price target for Accenture shares to $365, maintaining a "Buy" rating for the company.
Recent developments within Accenture include significant leadership changes, with new appointments such as Angie Park as the new Chief Financial Officer and Mauro Macchi as the Chief Executive Officer for Europe, the Middle East, and Africa. O
ther notable appointments include Angela Beatty as Chief Leadership and Human Resources Officer, Karthik Narain as Chief Technology Officer, and Bhaskar Ghosh as Chief Strategy and Innovation Officer.
In addition to leadership changes, Accenture has been active in business developments. Accenture Song was appointed as the global creative and content agency of record for Randstad NV, and the company announced the acquisition of Teamexpat, a specialist in embedded software for high-tech industries.
Kevin Hern, representative of Oklahoma's 1st congressional district, has also invested in Accenture, purchasing shares valued between $1,001 and $15,000. These recent developments highlight Accenture's active role in both the investment and business sectors.
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