Analyst’s Positive Rating
RBC Capital Markets analyst Daniel R. Perlin reaffirmed the Outperform rating on Accenture Plc (NYSE: ACN), raising the price target to $381 from $374.
Quarterly Sales Performance
Accenture reported second-quarter fiscal 2024 sales of $15.80 billion, slightly below the consensus of $15.84 billion, remaining stable year-over-year in both U.S. dollars and local currency.
GenAI Project Acceleration
Despite a challenging macro environment and a decline in demand for smaller projects, GenAI projects are rapidly gaining momentum. The company recorded $600 million in bookings in the quarter, bringing the year-to-date total to $1.1 billion.
Guidance and Revenue Estimates
FY24 guidance was revised downward, with the third-quarter guidance falling below previous street expectations. Management attributes this adjustment to increased inorganic growth and the continued benefits from earlier substantial deals.
Financial Projections
Incorporating the latest results and guidance, Perlin adjusted the FY24 revenue estimate to $65.1 billion from $65.5 billion, with the adjusted EPS estimate lowered from $12.25 to $12.05. For FY25, revenue estimates were reduced to $68.2 billion from $68.7 billion, with the adjusted EPS estimate lowered to $12.85 from $13.10.
Investment Perspective
Despite the premium valuation compared to peers, Perlin believes the current price forecast is sustainable due to Accenture’s consistent total return proposition through dividends and buybacks. Accenture’s unique positioning to guide clients in transitioning to a digital core for AI and GenAI opportunities further bolsters its investment appeal.
Stock Exposure Opportunities
Interested investors can access Accenture’s stock through ETFs such as iShares U.S. Tech Independence Focused ETF (IETC) and Natixis Vaughan Nelson Select ETF (VNSE).
Market Performance
ACN shares were trading at $338.17, showing a decline of 1.99% on the last trading day.
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