Mixed Analyst Ratings for Accenture: Price Targets Lowered, Hold Ratings Maintained

BMO Capital's Keith Bachman lowered their price target on Accenture (NYSE: ACN) by 2.8% from $360 to $350 on 2023/09/29. The analyst maintained their Hold rating on the stock.

The adjustment to the price target came after Bachman assessed Accenture's fourth-quarter and fiscal year 2023 financial results, which were released on September 28. While the management's fiscal year 2024 revenue guidance fell slightly below BMO's forecast, Bachman saw it as "appropriately conservative" but still viewed it as disappointing.

However, Bachman remained optimistic about Accenture's future, stating that the company should continue to expand its operating margins. The analyst also noted that artificial intelligence (AI) currently contributes only a small portion to Accenture's total value and believes that more time is needed before it has a meaningful impact on the company's results.

In the fourth quarter of 2023, Accenture reported earnings per share (EPS) of $2.71, surpassing the Zacks Consensus Estimate of $2.62 and showing a 4.2% increase from the same period in 2022. The company's revenue for the quarter reached $15.99 billion, in line with the Zacks Consensus Estimate and up 3.7% from the previous year. Additionally, Accenture generated $3.41 billion in operating cash flow during the quarter.

For the fiscal year 2023 as a whole, Accenture achieved an EPS of $11.67, a 9% increase compared to the previous year. The company's revenue for the fiscal year amounted to $64.11 billion, representing a 4.1% growth. The operating cash flow for the year stood at $9.52 billion.

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

CEO Julie Sweet expressed satisfaction with Accenture's performance in fiscal year 2023, highlighting the company's ability to meet client needs and achieve significant milestones. Sweet mentioned that Accenture received new bookings of $72 billion during the fiscal year, had 106 clients with quarterly bookings exceeding $100 million, and reached a record of 300 Diamond clients, representing its largest relationships. Furthermore, Sweet noted that the company's generative AI bookings of $300 million in the last six months position Accenture at the forefront of AI-driven reinvention.

In addition to BMO Capital's rating and price target adjustment, other analysts also updated their views on Accenture on September 29. Baird's David Koning lowered the price target by 3% to $332 and maintained a Hold rating on the stock. Meanwhile, Piper Sandler's Arvind Ramnani and TD Cowen's Bryan Bergin both reduced their price targets by 3.8% to $312 and maintained Hold ratings on the stock.

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

The consensus forecast among analysts is that Accenture's upcoming fiscal year will deliver an EPS of $13.03. If the analysts' predictions hold true, the company's next yearly EPS will increase by 14.7% compared to the previous year.

Since Accenture's latest quarterly report on September 28, the stock price has increased by 2.1%. On a year-over-year basis, the stock has risen by 18.9%. During this period, Accenture has outperformed the S&P 500, which has seen a gain of 17.8%.

BMO Capital analyst Keith Bachman is ranked in the top 4% out of 4,343 Wall Street analysts by WallStreetZen. With an average return of 6.9% and a win rate of 57.9%, Bachman specializes in the Consumer Defensive, Consumer Cyclical, and Technology sectors.

Accenture, founded in 1989 and headquartered in Dublin, Ireland, 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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