Accenture (ACN) is grappling with a difficult macro environment, but its unique position to provide digital transformation at scale and its balanced capital redeployment support a higher valuation, RBC Capital Markets said in a report emailed Friday.
The brokerage said it reduced its fiscal 2024 and 2025 estimates following the company’s fiscal Q2 results and fiscal 2024 guidance reduction.
For fiscal 2024, RBC now expects adjusted earnings of $12.05 per share and revenue of $65.1 billion, down from its previous forecasts of $12.25 per share and $65.5 billion. For fiscal 2025, it now projects adjusted EPS of $12.85 on revenue of $68.2 billion, down from its previous estimates of $13.10 per share and $68.7 billion.
The “challenging” demand environment “is constraining budgets to be allocated towards larger transformations, which we note converts to revenue slower than smaller deals,” it said.
RBC has outperform rating on the company’s stock and raised its price target to $381 from $374, which it said is sustainable given the company’s consistent total return proposition, and with Accenture “uniquely positioned to help clients migrate to a digital core in order to access opportunities with AI and GenAI.”