The Rise of Accenture’s GenAI Project Amidst Declining Demand For Smaller Endeavors

Photo of author

By Ronald Tech

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).

See also  Elon Musk's Lawsuit Against Watchdog Group DismissedElon Musk's Legal Battle: A Judge's Verdict

Market Performance

ACN shares were trading at $338.17, showing a decline of 1.99% on the last trading day.

Photo via Wikimedia Commons