On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on Accenture plc (NYSE: NYSE:ACN), increasing the price target to $365 from $330 while maintaining a Hold rating on the stock. The revision follows Accenture's announcement of first-quarter fiscal year 2025 earnings, which surpassed expectations. With a current market capitalization of $217 billion, Accenture is trading near its 52-week high, and according to InvestingPro analysis, the stock appears slightly overvalued at current levels.
Accenture reported a revenue of $17.7 billion, marking an approximate 9% year-over-year growth and 8% growth in constant currency (cc). The company's adjusted earnings per share (EPS) for the quarter came in at $3.59, exceeding forecasts. Trading at a P/E ratio of 32.16x, InvestingPro data shows the stock commands a premium valuation relative to its near-term earnings growth potential.
InvestingPro subscribers have access to 13 additional key insights about Accenture's valuation and growth prospects. Following these results, Accenture also updated its revenue guidance to a 4-7% growth rate in constant currency, aligning with Deutsche Bank's projections prior to the announcement.
The company attributed its revenue growth to success in securing large transformational deals, a result of its revised go-to-market strategy. This approach has led to a cumulative effect, with significant deals contributing to revenue growth above initial expectations. Despite the positive constant currency revenue outcomes for the quarter, management noted on the call that the overall demand environment remains unchanged. The current market is still largely driven by large-scale cost transformation projects, with no significant uptick in demand for smaller, discretionary deals.
The cautious stance of the management is reflected in the upper end of the revenue guidance, which suggests no substantial improvement, while the lower end indicates the possibility of further deterioration. In light of the updated guidance, Deutsche Bank has slightly increased its fiscal year 2025 EPS estimate by $0.01 to $12.79. Additionally, the projections for fiscal years 2026 and 2027 have been adjusted upwards by $0.04 and $0.13, resulting in new EPS forecasts of $14.10 and $15.74, respectively.
The revised price target of $365 reflects Deutsche Bank's assessment of Accenture's current performance and future prospects, while the Hold rating indicates a neutral position on the stock's potential movement. InvestingPro's comprehensive analysis, including its Financial Health Score of "GOOD" and detailed valuation metrics, provides investors with deeper insights into Accenture's market position. .
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