Susquehanna Thinks Accenture Is Losing Share To Deloitte, Downgrades Stock

Susquehanna downgraded Accenture Plc ACN, saying it's awaiting clearer outlook in strategy and consulting dimension. The firm downgraded shares from Positive to Neutral, and maintained its price target at $144.

At time of writing, Accenture shares were off 0.75 percent at $134.43.

Analyst James Friedman said Accenture's stock is just one turn from its peak 10-year P/E multiple. Additionally, he noted that Strategy/Consulting revenues were decelerating. That said, the analyst noted the company finished 2017 with double-digit growth in Application Services, which offset the muted results in Strategy/Consulting in the fiscal fourth quarter results.

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Susquehanna, however, indicated that Strategy/Consulting revenues, despite accounting for merely 29 percent of the total revenues, appear interconnected. The firm sees Strategy/Consulting as vital to revenue streams in other business dimensions.

The firm sees the six quarters of deceleration as suggesting weakness in more than one-end vertical. This made the firm surmise that the company might be losing share to other large, but still private consultancies.

Susquehanna referred to the reporting season for services companies that is set to begin this month as potential catalysts.

On valuation, the firm further said its downside risk of $117 represented 17 times its 2019 earnings per share estimate, which might materialize on continued weakness in Strategy/Consulting, weakness in Products, deterioration in Europe or higher-than-expected forex headwinds.