Accenture stock maintains buy rating at Stifel despite 7% drop

Investing.com - Stifel has reiterated its Buy rating and $355.00 price target on Accenture plc (NYSE:ACN) after the company’s shares fell 7% on Friday following its fiscal third-quarter results. The stock, currently trading at $291.08, has declined over 9% in the past week, with InvestingPro data indicating oversold conditions. The IT services giant, with a market capitalization of $181.7 billion, is currently trading below its Fair Value.

The research firm noted that certain data points such as bookings and headcount could be interpreted negatively without closer scrutiny, while management’s reluctance to outline the impact of DOGE (Department of Government Efficiency) into fiscal year 2026 likely contributed to Friday’s stock performance decline.

Accenture’s fiscal third-quarter results actually beat expectations with 4% year-over-year organic growth compared to the consensus estimate of 2%, while earnings per share increased 13% versus the consensus expectation of 6%. Both consulting and outsourcing segments showed stability, with consulting up 6% and outsourcing achieving high single-digit growth. The company maintains strong fundamentals with a 32% gross profit margin and robust cash flows, according to InvestingPro data, which offers 10+ additional insights about Accenture’s financial health.

The company’s fiscal fourth-quarter revenue guidance of 0-4% organic growth remained largely unchanged, reflecting ongoing macroeconomic uncertainty. The implied earnings per share of approximately $2.90, representing a 5% year-over-year increase, fell below the consensus estimate of $3.00, though the company provided no specific quarterly guidance. Notably, InvestingPro analysis shows that nine analysts have recently revised their earnings expectations downward for the upcoming period, while the stock trades at a P/E ratio of 22.7x.

Stifel highlighted that the fiscal fourth-quarter revenue guidance reflects a 200 basis point year-over-year headwind from DOGE, and excluding this impact, fourth-quarter revenue growth would be similar to the first through third quarters of fiscal 2025 at approximately 4% constant currency organic growth. Despite near-term headwinds, the company maintains a strong financial health score of 2.75 (Good) on InvestingPro’s comprehensive assessment framework, which evaluates over 100 financial metrics available in the Pro Research Report.

In other recent news, Accenture reported $1.5 billion in generative AI bookings for the quarter, marking a 67% growth year-over-year, alongside strong demand for large transformational deals. The company added 30 new clients with quarterly bookings exceeding $100 million, demonstrating sustained momentum in high-value engagements. Accenture has announced a restructuring of its operations, effective September 1, 2025, creating a new integrated business unit called Reinvention Services to enhance data and AI capabilities in service delivery. William Blair reiterated an Outperform rating for Accenture, citing its leadership in next-generation capabilities and strategic global presence. Meanwhile, BMO Capital lowered its price target to $325 from $355, maintaining a Market Perform rating due to challenges in the federal sector, despite Accenture raising its full-year revenue guidance. Guggenheim also reduced its price target to $335 from $360 while maintaining a Buy rating, expressing concerns about fiscal year 2026 expectations. Stifel maintained a Buy rating and a $355 price target, expecting Accenture to meet its fiscal third-quarter targets amid challenging market conditions. Accenture’s restructuring includes leadership changes, with Manish Sharma appointed as Chief Services Officer, aiming to deliver faster solutions and scale the business.

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