Baird cuts Accenture price target to $372, keeps Outperform rating

Published 21/03/2025, 13:34
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On Friday, Baird analyst David Koning adjusted the price target for Accenture plc (NYSE:ACN) stock, bringing it down to $372 from the previous $390, while maintaining an Outperform rating on the company’s shares. Koning’s reassessment follows a period of volatility for Accenture, with its stock price dropping from nearly $400 to $300 in just a few weeks. According to InvestingPro data, the stock’s RSI suggests it’s in oversold territory, with a market capitalization of $188.5 billion and a P/E ratio of 26.8x.

Accenture’s financial results for the second fiscal quarter showed organic growth accelerating to its highest rate in eight quarters. In response to these results, the company raised its guidance for fiscal year 2025. The company maintains strong financials, with InvestingPro analysis showing a robust 32.2% gross profit margin and healthy return on equity of 27%. Despite this positive performance, investor concerns have been heightened due to several factors. These include the company’s exposure to the US federal government, which accounts for 8% of its revenue, macroeconomic uncertainties, and flat year-over-year bookings for the second fiscal quarter, with the second half of the fiscal year presenting a challenging comparison.

Koning highlighted the value he sees in Accenture’s stock after the recent price decline. He pointed out that there is no significant new development regarding the company’s dealings with the US federal government, known as DOGE, that should worry investors. Additionally, while Accenture has acknowledged the increased uncertainty in the macroeconomic environment, the company has not observed a slowdown in its business. The company’s financial stability is evident in its 21-year track record of consistent dividend payments, with a current yield of 2% and impressive 14.7% dividend growth in the last twelve months.

The analyst expressed confidence in Accenture’s strong market position and the quality of its earnings, which he described as having a "moat." Koning also identified potential catalysts that could drive the company’s stock performance in the future. These include an eventual improvement in IT spending and the emergence of General AI as a significant investment theme. Furthermore, he suggested that concerns over DOGE may become less of an obstacle for the company moving forward.

Accenture’s recent performance and the adjustments to its financial outlook indicate the company’s resilience in the face of uncertain market conditions. Despite the lowered price target, Baird’s continued Outperform rating signals a belief in Accenture’s long-term growth potential and its ability to navigate through current challenges.

In other recent news, Accenture reported a 5% increase in revenue for the second quarter of fiscal 2025, reaching $16.7 billion, along with a 7% rise in diluted earnings per share. Despite these positive results, the company is facing challenges in its federal services unit due to a shift in U.S. government spending, which has led to a slowdown in this segment that accounts for about 8% of its total revenue. This has prompted several analysts to adjust their outlooks on Accenture. Mizuho (NYSE:MFG) Securities lowered its price target to $365 but maintained an Outperform rating, citing strong execution in next-generation technology solutions as a potential area for growth. Deutsche Bank (ETR:DBKGn) also cut its price target to $290, maintaining a Hold rating, while highlighting Accenture’s solid revenue growth but noting pressures from macroeconomic conditions. TD Cowen reduced its price target to $365, maintaining a Buy rating, and acknowledged the headwinds from federal procurement pressures. Stifel adjusted its price target to $355, affirming a Buy rating, and noted the company’s stable revenue guidance amidst increased uncertainty. As Accenture navigates these challenges, the market remains focused on how these factors will impact its future performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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