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Dublin, Ireland-based Accenture plc (ACN) provides strategy and consulting, industry X, song, and technology and operation services. Valued at $200.1 billion by market cap, the company delivers a range of specialized capabilities and solutions to clients across all industries and operates a network of businesses providing outsourcing and alliances.
Shares of this leading global professional services company have underperformed the broader market considerably over the past year. ACN has gained 3.3% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 21.7%. In 2024, ACN stock is down 9%, while SPX is up 13.9% on a YTD basis.
Narrowing the focus, ACN has also lagged behind the SPDR S&P Software & Services ETF (XSW). The exchange-traded fund has gained about 13.3% over the past year. Moreover, the ETF’s marginal decline on a YTD basis outshines the stock’s high single-digit fall over the same time frame.
On Jul. 10, ACN shares closed down marginally after the acquisition of Cientra, a U.S. company with expertise in embedded IoT and microprocessor design, in which the terms of the deal were not disclosed, which led to a slightly negative reaction from investors.
However, on Jun. 20, ACN shares closed up more than 7% after reporting its Q3 results. Its bookings of $21.1 billion were well above the consensus estimates of $17.7 billion. However, its adjusted EPS of $3.13 missed Wall Street's expectation of $3.14, and its revenue of $16.47 billion fell short of the $16.52 billion forecast. For Q4, ACN expects revenue to be between $16.1 billion and $16.7 billion, or 2% to 6% growth in local currency.
The company also updated its full-year business outlook and expects adjusted EPS to be between $11.85 and $12. Revenue growth is expected to be between 1.5% and 2.5% in local currency, from 1% to 3%.
For the current fiscal year, ending in August, analysts expect ACN’s EPS to grow 2.4% to $11.95 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 26 analysts covering ACN stock, the consensus is a “Moderate Buy.” That’s based on 15 “Strong Buy” ratings, one “Moderate Buy,” and 10 “Holds.”
This configuration is more bullish than a month ago, with 14 analysts suggesting a “Strong Buy.”
On Jun. 26, Morgan Stanley analyst James Faucette downgraded ACN to a “Hold” rating with a price target of $300, implying a potential downside of 6.1% from current levels.
The mean price target of $345.71 represents an 8.3% premium to ACN’s current price levels. The Street-high price target of $445 suggests an ambitious upside potential of 39.4%.
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