Mizuho Securities adjusted its outlook on Accenture plc (NYSE:ACN), raising the price target to $395 from $365, while maintaining an Outperform rating on the stock. This revision follows Accenture's announcement of robust fourth-quarter fiscal year 2024 results, which included a notable year-over-year growth in new bookings for the second consecutive quarter.
Accenture's recent financial disclosure revealed a significant uptick in new bookings, with growth exceeding 20% year-over-year. Additionally, the company provided a solid constant currency (CC) growth guidance for fiscal year 2025, ranging from 3% to 6%. The midpoint of this guidance suggests a potential stabilization in IT Services spending, which may indicate that the sector has moved past its lowest point in terms of expenditure.
Mizuho's analysis, which includes a proprietary study of operating expense spending trends among S&P 500 companies, supports the view of a moderating decline in spending compared to earlier in the year. This perspective is detailed in the firm's fiscal year 2025 preview report.
The analyst at Mizuho expressed confidence in Accenture's conservative guidance for the upcoming fiscal year, especially in light of the company's momentum in Generation AI (GenAI) services. These services are expected to act as a catalyst for increased customer spending throughout fiscal year 2025.
To justify the increased price target, Mizuho has rolled its valuation forward to the calendar year 2026 adjusted earnings per share (EPS) of $14.60. The firm's endorsement of Accenture's performance and outlook underscores a positive sentiment towards the company's financial trajectory and market position.
Accenture has delivered impressive financial results, with record bookings of $81 billion and revenue of $65 billion in fiscal year 2024. GenAI bookings for the quarter reached $1 billion, marking an 11% increase from the previous quarter, bringing the total GenAI bookings to $3 billion for the fiscal year. TD Cowen upgraded Accenture's rating from Hold to Buy, reflecting optimism about the company's future prospects.
Similarly, BMO Capital increased its price target for Accenture, highlighting the company's consistent bookings performance. William Blair maintained an Outperform rating on Accenture, emphasizing the company's leadership in AI development. However, Baird maintained a Neutral rating, citing cautiousness in IT spending.
InvestingPro Insights
Accenture's strong performance and positive outlook, as highlighted by Mizuho Securities, are further supported by real-time data and insights from InvestingPro. The company's market capitalization stands at an impressive $219.05 billion, reflecting its significant presence in the IT Services industry.
InvestingPro data shows that Accenture's revenue for the last twelve months as of Q4 2024 reached $64.89 billion, with a modest growth of 1.22%. This aligns with the company's solid constant currency growth guidance for fiscal year 2025 mentioned in the article. The operating income margin of 15.46% demonstrates Accenture's ability to maintain profitability amid market challenges.
Two relevant InvestingPro Tips shed additional light on Accenture's financial health and market position. Firstly, Accenture "has maintained dividend payments for 20 consecutive years," highlighting its commitment to shareholder returns. This is particularly noteworthy given the company's recent robust financial results. Secondly, Accenture is described as a "prominent player in the IT Services industry," which supports Mizuho's positive outlook on the company's potential to capitalize on emerging trends like Generation AI services.
For investors seeking a deeper understanding of Accenture's financial position and growth prospects, InvestingPro offers 10 additional tips, providing a comprehensive analysis to inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.