Accenture could lower its fiscal 2023 revenue outlook when it reports February-quarter earnings early Thursday, analysts say. Currency exchange rates have been a headwind for ACN stock. But now corporate demand for consulting and technology services also appears weaker.
Dublin-based Accenture reports fiscal second-quarter earnings early Thursday. Analysts expect earnings to dip 2% to $2.49 a share with revenue growing nearly 4% to $15.61 billion.
In the December quarter, revenue from consulting services disappointed.
"Our sense is fiscal Q2 investor expectations have come down for ACN, especially for consulting," Susquehanna analyst James Friedman said in a note to clients.
Other information technology services firms, which reported earnings earlier, have noted weakening business trends, Morgan Stanley analyst James Faucette said in a note.
"Peers have highlighted demand weakness beginning in late December, which we believe is not contemplated in (Accenture) management's outlook," he said. Faucette added: "While pipelines look healthy, we anticipate ACN also faces elongated sales cycles, with greater deal scrutiny likely slowing conversion and bookings momentum."
ACN Stock: Regional Bank Exposure?
"Additionally, we continue to monitor ACN's financial services industry group as we would expect some adverse impact from regional bank exposure," Faucette went on to say. "Given broader macroeconomic uncertainty, a slower pace of acquisitions in the quarter and typical timing around tightening of outlook ranges, we expect management to at least trim the high end of its fiscal 2023 outlook."
At Deutsche Bank, ACN stock analyst Bryan Keane said in his note to clients: "Further softening in consulting is likely and we continue to see signs of the Fortune 500 pulling back on information technology spend. Consequently, we see potential for ACN to lower the top end of 2023 revenue guidance by about 1 percentage point from 8% to 11% in constant currency to 8% to 10%."
Further, Baird analyst David Koning noted in a report that Accenture earnings could get a boost from Vista Equity Partners' acquisition of Duck Creek for $2.6 billion. Accenture owned 16% of Duck Creek, a maker of insurance software.
Accenture Health Care Contract Extension
In the health care market, Accenture recently extended a big contract. On March 2, Accenture announced a five-year, $628 million extension from the U.S. Centers for Medicare and Medicaid Services to continue its work supporting the Healthcare.gov website.
ACN stock edged up a fraction to 258.25 on the stock market today. Accenture stock has retreated nearly 5% in 2023.
Accenture continues to make acquisitions to speed its push into digital services, cloud computing artificial intelligence and cybersecurity products. The company has stated that acquisitions generally boost fiscal year revenue by about 2.5%.
Heading into the Accenture earnings report, ACN stock holds a Relative Strength Rating of 31, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
