Accenture's Q4 Earnings Beat Expectations, but FY 2024 Outlook Falls Short

Piper Sandler's Arvind Ramnani lowered their price target on Accenture (NYSE: ACN) by 3.8% from $312 to $300 on 2023/09/29. The analyst maintained their Hold rating on the stock.

Ramnani's decision to lower the price target came after Accenture released its fourth-quarter and fiscal year 2023 earnings report on September 28. According to Ramnani, the company's guidance for fiscal year 2024 was "disappointing," with macroeconomic pressures impacting Accenture's Consulting and Communication, Media, and Technology sectors. As a result, the midpoint guidance fell short of adjusted Street expectations.

In their research note, Ramnani highlighted Piper Sandler's channel checks, which indicated a "low to moderate possibility of a Q4 budget flush." This could further impact Accenture's performance in the near term.

Looking at the earnings report, Accenture reported strong results for the fourth quarter of 2023. The company's earnings per share (EPS) of $2.71 beat the Zacks Consensus Estimate of $2.62 and showed a 4.2% increase compared to the same quarter in the previous year. Revenue for the quarter stood at $15.99 billion, roughly in line with the Zacks Consensus Estimate and a 3.7% increase from the previous year.

For the full fiscal year 2023, Accenture reported EPS of $11.67, representing a 9% increase from the previous year. The company's revenue for the fiscal year reached $64.11 billion, a 4.1% increase compared to the previous year.

Looking ahead, Accenture's management provided guidance for the first quarter of 2024, expecting revenue between $15.85 billion and $16.45 billion. For the full fiscal year 2024, the company expects EPS in the range of $11.97 to $12.32, revenue growth of 2% to 5%, and operating cash flow between $9.3 billion and $9.9 billion.

CEO Julie Sweet expressed pride in Accenture's strong financial performance in fiscal year 2023, stating, "Our ability to remain laser-focused on meeting the needs of our clients is reflected in new bookings of $72 billion in FY 2023." She also highlighted the company's success in securing 106 clients with quarterly bookings of more than $100 million and reaching a record 300 Diamond clients.

Other analysts have also updated their ratings and price targets for Accenture following the earnings report. Baird's David Koning lowered their price target by 3%, from $332 to $322, while maintaining their Hold rating on the stock. TD Cowen's Bryan Bergin lowered their price target by 3.8%, from $312 to $300, and maintained their Hold rating. BMO Capital's Keith Bachman lowered their price target by 2.8%, from $360 to $350, while also maintaining their Hold rating.

According to data from WallStreetZen, 57.1% of top-rated analysts currently rate ACN as a Strong Buy or Buy, while 42.9% see it as a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Accenture's upcoming year will deliver earnings per share (EPS) of $13.03. If the analysts' predictions hold true, ACN's next yearly EPS will be up by 14.7% on a year-over-year basis.

In terms of stock performance, Accenture's share price has increased by 2.1% since the latest quarterly report on September 28. Year-over-year, the stock has seen a significant gain of 18.9%. During this period, Accenture has outperformed the S&P 500, which has shown an increase of 17.8%.

It is worth noting that Arvind Ramnani, the analyst who lowered the price target, is ranked in the bottom 1% out of 4,343 Wall Street analysts by WallStreetZen. With an average return of -8% and a 37.5% win rate, Ramnani specializes in the Consumer Defensive and Financial Services sectors, among others.

Accenture, founded in 1989 and based in Dublin, IE, is a management consulting, technology, and outsourcing services company. It serves various industries, including communications, electronics, technology, media, entertainment, banking, capital markets, insurance, healthcare, chemicals, energy, forest products, metals and mining, and utilities.

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