On Wednesday, BofA Securities revised its price target for shares of Accenture plc (NYSE:ACN), reducing it to $365 from the previous target of $419. Despite the adjustment, the firm maintains a Buy rating on the global professional services company.
The revision comes ahead of Accenture's fiscal third-quarter report scheduled for June 20, 2023. BofA Securities anticipates the company's constant currency revenue and earnings per share for the quarter to align with current expectations.
However, the firm acknowledges that Accenture is not entirely shielded from the current downturn in client discretionary spending. This is particularly relevant for the Strategy & Consulting (S&C) division, representing 21% of the company's forecasted fiscal year 2023 revenues.
Given the economic environment, BofA Securities suggests that there could be a potential reduction in the higher end of Accenture's projected 1-3% revenue growth guidance for fiscal year 2024, which ends in August. Nevertheless, the firm posits that market expectations have significantly adjusted since the fiscal second-quarter report, as reflected by an approximate 18% decline in Accenture's share price.
Looking forward, BofA Securities points to the initial fiscal 2025 guidance, expected to be released in September, as the next significant event that could influence the company's stock. The firm believes that Accenture will continue to gain market share irrespective of macroeconomic conditions.
With the stock currently trading at 21 times calendar year 2025 projected earnings—considerably below the five-year average of approximately 26 times—BofA Securities sees Accenture's risk/reward profile as attractive and reaffirms its Buy rating.
InvestingPro Insights
As Accenture (NYSE:ACN) approaches its fiscal third-quarter report, investors closely monitor the company's performance metrics. According to InvestingPro data, Accenture boasts a robust market capitalization of $181.11 billion and maintains a price-to-earnings (P/E) ratio of 25.79, which is adjusted to 23.57 for the last twelve months as of Q2 2024. Despite a modest revenue growth of 2.26% during the same period, the company's stock is trading near its 52-week low, which could indicate a potential buying opportunity for value-seeking investors.
Accenture's commitment to shareholder returns is evident, with a dividend yield of 1.79% and a notable record of raising its dividend for 4 consecutive years. Additionally, the company has maintained dividend payments for 20 consecutive years, reinforcing its financial stability. An InvestingPro Tip highlights Accenture's low price volatility, which could appeal to investors looking for steady performance in the current uncertain market environment. Moreover, the company's cash flows are reported to sufficiently cover interest payments, further underscoring its solid financial footing.
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