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On Thursday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Accenture plc (NYSE: NYSE:ACN), reducing the price target from $398.00 to $365.00. Despite this change, the firm maintained an Outperform rating on the company’s shares. This revision follows Accenture’s announcement of strong second-quarter fiscal year 2025 results and an increase in its full-year 2025 constant currency (CC) growth guidance. The company’s updated guidance now anticipates a growth range of 5% to 7%, a slight rise from the previously forecasted 4% to 7%. According to InvestingPro data, the stock appears slightly undervalued at its current price of $300.91, with analyst targets ranging from $290 to $455.
Despite these positive results, Accenture’s stock experienced a sell-off on Wednesday, influenced by concerns surrounding Dogecoin (DOGE) and broader macroeconomic factors. Mizuho analysts acknowledged these challenges but expressed confidence that they are temporary setbacks. They highlighted Accenture’s status as a best-in-class operator, likely to capture more market share when economic conditions shift, due to its strong execution and leadership in next-generation technology solutions, such as Generative AI (GenAI). InvestingPro analysis supports this view, showing strong financial health with moderate debt levels and robust cash flows that easily cover interest payments. The company maintains an impressive 21-year streak of consistent dividend payments, with 14.7% dividend growth in the last twelve months.
Accenture’s current valuation, at approximately 21 times its calendar year 2026 adjusted earnings per share (EPS), was also noted as increasingly attractive by Mizuho. This valuation represents a notable discount compared to Accenture’s historical average, where it has typically traded at a premium of roughly 30% over the S&P 500 index. The current premium stands at about 15%.
In addition to the price target adjustment, Mizuho also revised its EPS estimates for Accenture for fiscal years 2025 and 2026. The revisions were primarily due to expectations of modestly lower growth and profitability in the coming periods. Despite these revisions, the Outperform rating suggests that Mizuho continues to view Accenture favorably in the long term. This aligns with InvestingPro Tips indicating the company’s strong long-term performance, with impressive returns over both the past five and ten years. Nine additional exclusive insights are available to InvestingPro subscribers.
In other recent news, Accenture reported its financial results for the second quarter of fiscal year 2025, with earnings per share (EPS) of $2.82, slightly surpassing analyst expectations of $2.81. The company’s revenue reached $16.7 billion, exceeding the anticipated $16.63 billion. Despite these positive results, Accenture’s stock experienced a decline, reflecting investor concerns over broader market conditions and future guidance. Deutsche Bank (ETR:DBKGn) adjusted its price target for Accenture to $290 from $365, maintaining a Hold rating, while TD Cowen lowered its target to $365 from $394 but upheld a Buy recommendation. Stifel also revised its target to $355 from $380, continuing to endorse a Buy rating. Accenture’s federal services unit, which contributes 8% of its total revenue, has faced challenges due to changes in U.S. government spending priorities, impacting sales and revenue. Nevertheless, the company continues to demonstrate resilience with strong performance in areas like artificial intelligence and digital transformation, evidenced by $1.4 billion in new GenAI bookings.
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