Zinger Key Points
- Goldman Sachs reiterates Buy rating on Accenture, citing strong secular tailwinds despite near-term margin pressure and macro uncertainty.
- Accenture's stock is seen as a prime entry point by Goldman Sachs, with a lower price target of $415, down from $430.
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Goldman Sachs analyst James Schneider reiterated the Buy rating on Accenture plc ACN, lowering the price forecast to $415 from $430.
The tech behemoth reported second-quarter 2025 earnings of $2.82 per share, slightly above the consensus of $2.81.
The company reported sales of $16.66 billion, almost in line with the consensus of $16.62 billion and management guidance of $16.2 billion–$16.8 billion.
Schneider highlights that Accenture's results are slightly negative for the IT Services sector, as management's comments indicate rising uncertainty in the broader discretionary environment, though the company's underlying business is still showing gradual improvement.
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The analyst acknowledges that some investors might be disappointed with management's cautious comments on the current demand environment, particularly given the increased uncertainty resulting from recent macroeconomic events.
However, Schneider writes that this cautious approach is warranted, given the lack of clarity among business leaders and policymakers regarding future macroeconomic outcomes.
Despite these concerns, the focus remains on Accenture's performance and the overall industry backdrop. The analyst notes that the company's increased revenue guidance is a significant positive development.
The analyst maintains a Buy rating on Accenture's stock, highlighting the strong secular tailwinds the company is poised to benefit from once cyclical challenges subside.
Furthermore, Schneider views the current stock price as an attractive entry point for investors.
Schneider explains that management has pointed to increased use of subcontractors as the primary reason for near-term margin pressure, although the company's internal utilization rate remains strong at 91%. He suggests that the company could be experiencing additional margin pressure due to the start of several significant new outsourcing contracts during the quarter.
Price Action: ACN shares are trading higher by 0.99% to $303.90 at last check Friday.
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