Accenture stock falls despite UBS reiterating buy rating on AI growth

Published 23/06/2025, 16:26
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Investing.com - Accenture plc (NYSE:ACN) stock fell to $289.76, marking a 7% decline on Monday despite UBS maintaining its buy rating and $395 price target on the consulting giant. According to InvestingPro data, the stock’s RSI suggests oversold conditions, with shares now trading near their 52-week low of $273.19.

UBS cited Accenture’s fiscal third-quarter earnings beat and sequential full-year 2025 guidance raise, noting the market appeared concerned about growth uncertainty beyond fiscal 2025. The firm reported that bookings declined 6% in the quarter ended May 2025, with ongoing uncertainty around federal contract cancellations and slower procurement processes. The company maintains strong fundamentals with a 32% gross profit margin and healthy returns, generating $10.2 billion in levered free cash flow over the last twelve months.

Accenture has adjusted its expected fiscal 2025 merger and acquisition spending to $1 billion-$1.5 billion from the previous $2 billion-$3 billion target due to current market conditions. The company also announced a business reorganization to Reinvention Services with accompanying leadership changes.

Generative AI remains a growth catalyst for Accenture, with new generative AI bookings reaching $1.5 billion in the fiscal third quarter, up from $1.4 billion in the second quarter and $0.9 billion in the year-ago period. This represents continued momentum in the company’s artificial intelligence initiatives.

UBS expressed confidence that Accenture can achieve 6-7% constant currency revenue growth, with approximately half coming from organic sources. The firm believes the projected 2025 revenue boost offers optimism despite uncertainties in consulting bookings, macroeconomic conditions, and digital, operations, growth and enablement (DOGE) segments. With a market capitalization of $182 billion and trading at a P/E ratio of 22.9x, InvestingPro analysis suggests the stock is currently undervalued, with 10+ additional ProTips available for subscribers.

In other recent news, Accenture’s fiscal third-quarter results surpassed expectations with a 4% year-over-year organic growth, compared to the consensus estimate of 2%, and a 13% increase in earnings per share, which exceeded the anticipated 6%. Despite this positive performance, Stifel highlighted that the company’s fiscal fourth-quarter revenue guidance remains unchanged at 0-4% organic growth, reflecting ongoing macroeconomic uncertainty. Accenture’s fiscal fourth-quarter earnings per share guidance of approximately $2.90 falls below the consensus estimate of $3.00. Additionally, Accenture reported $1.5 billion in generative AI bookings for the quarter, marking a 67% year-over-year growth, with strong demand for large transformational deals. TD Cowen lowered its price target for Accenture to $342, citing light bookings and fiscal year 2026 headwinds, while maintaining a Buy rating. BMO Capital also reduced its price target to $325, noting federal headwinds, yet acknowledged Accenture’s raised full-year revenue guidance. Meanwhile, Guggenheim adjusted its price target to $335, expressing concerns about fiscal year 2026 expectations but maintained a Buy rating. William Blair reiterated an Outperform rating, emphasizing Accenture’s leadership in next-generation capabilities and its strategic global presence.

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