Goldman Sachs reiterated a Neutral rating on shares of Accenture plc (NYSE:ACN), with a steady price target of $370.00. The firm's stance comes after evaluating the company's recent quarterly performance. According to the analysis, Accenture's stock is anticipated to experience a moderate increase due to the combination of its guidance aligning with expectations and a robust bookings performance. These factors suggest that the company's future financial results may surpass expectations.
Accenture's current outlook aligns with the higher end of management's guidance, which Goldman Sachs' estimates reflect. Despite recent concerns about demand, based on discussions with investors, there was an anticipation of results ranging from in line to slightly better. This outlook persists even after recent reports over the past week hinted at staggered promotion cycles within the company, an approach that the firm considers to be anticipated.
Goldman Sachs has decided to maintain its Neutral rating on Accenture's stock. The firm indicates that a more positive stance could be adopted in the future if there are clear signs of increased discretionary spending by the company's clients.
Such a shift is deemed necessary for Accenture's stock to significantly outperform at its current levels. The assessment reflects a cautious optimism, contingent upon the company's ability to capitalize on potential increases in client spending.
In other recent news, Accenture has reported a successful fiscal year 2024, exhibiting a strong financial performance despite challenging market conditions. The company's bookings increased by 14%, reaching a record $81 billion, and revenue grew by 2% to total $65 billion. Accenture's adjusted earnings per share also saw a moderate rise to $11.95.
The company's investments in GenAI technology tripled its revenue to approximately $900 million. Looking ahead, Accenture has projected revenues between $16.85 billion and $17.45 billion for fiscal year 2025, anticipating growth rates of 3% to 6% in local currency. Operating margins are expected to be between 15.6% and 15.8%, with earnings per share ranging from $12.55 to $12.91.
Accenture plans to invest approximately $3 billion in acquisitions and return at least $8.3 billion to shareholders. The company also added approximately 24,000 employees in Q4, primarily in technology roles, and expects to see significant growth in GenAI bookings.
InvestingPro Insights
Goldman Sachs' neutral outlook on Accenture (NYSE:ACN) is met with interesting data and insights from InvestingPro. With a market capitalization of $221.08 billion and a P/E ratio of 31.68, Accenture stands as a significant entity in the IT services sector. Investors may find comfort in Accenture's consistent history of dividend payments, having maintained them for 20 consecutive years and raising them for the last four. This track record of dividend growth is reflected in the latest figure, showing a 15.18% increase over the last twelve months as of Q3 2023.
Accenture's stock stability is underscored by its low price volatility, which might appeal to investors seeking a more stable investment in the IT services industry. Moreover, the company's solid financial performance is illustrated by a robust return on assets of 13.64% over the last twelve months as of Q3 2023. On the earnings front, six analysts have recently revised their earnings projections upwards for the upcoming period, indicating potential optimism about the company's profitability, which is further supported by the prediction that Accenture will remain profitable this year.
For investors seeking deeper analysis and additional insights, InvestingPro offers more tips, including the company's moderate level of debt and its high return over the last decade. To explore these tips and more, readers are encouraged to visit InvestingPro at https://www.investing.com/pro/ACN for a comprehensive suite of tools and data. Currently, InvestingPro lists an additional 10 tips for Accenture, providing a more detailed perspective on the company's financial health and market position.
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