Despite reporting upbeat results for its fiscal fourth quarter, Accenture Plc (ACN) shares experienced a dip in early trading on Friday. This comes amidst a flurry of earnings reports from various companies. Key analysts weighed in on Accenture’s performance, offering insights into the company’s future outlook.
Analyst Arvind Ramnani, in a bullish stance, upgraded Accenture’s rating from Neutral to Overweight and increased the price target from $329 to $395. He highlighted the company’s strong GenAI performance, reporting $1 billion in GenAI-related bookings, bringing the total GenAI bookings to $3 billion for fiscal 2024. Notably, $900 million of these bookings were converted into revenue during the year. Ramnani emphasized the 10x growth in both GenAI bookings and revenues, indicating a significant trend. He cited conservative guidance, robust bookings of $20.2 billion, and a substantial increase in hiring as positive indicators for Accenture’s future.
Another analyst, Daniel Perlin, maintained an Outperform rating while raising the price target from $377 to $389. He lauded Accenture’s revenue of $16.41 billion and earnings per share (excluding charges) of $2.79, exceeding analysts’ consensus estimates. Perlin highlighted the expansion of operating margins (excluding charges) by 10 basis points to 15.5%, surpassing Street expectations. He further noted that management’s guidance for fiscal 2025 implies revenues of $68.79 billion and adjusted earnings of $12.73 per share, slightly below consensus estimates. Perlin expressed confidence in Accenture’s ability to navigate the digital landscape and capitalize on AI and GenAI opportunities.
Keith Bachman, however, took a more cautious approach, reiterating a Market Perform rating while raising the price target from $380 to $390. Bachman acknowledged that Accenture’s quarterly results were largely in line with his estimations. He pointed to the company’s guidance of 3%-6% year-over-year growth, including a 3%+ contribution from mergers and acquisitions, as a potential starting point for future performance. Bachman acknowledged Accenture’s inconsistency in meeting the midpoint of guidance in recent years and anticipated in-line results with the possibility of upside tension. He also highlighted the potential for both Accenture and IBM to gain market share in AI workloads.
By the time of publication on Friday, Accenture’s share price had declined by 0.49% to $354.01. While the company demonstrated solid performance in its latest earnings report, the market’s reaction suggests cautious optimism regarding the company’s future prospects.
