Demand For Digital Services, Position To Deliver At Scale Earn Accenture Price Target Boost Post Q2 Beat

RBC Capital analyst Daniel Perlin maintains Accenture Plc ACN with an Outperform, raising the price target from $335 to $340.
On March 23, ACN reported second-quarter FY23 results that exceeded Perlin and Street estimates for both revenue and EPS, excluding business optimization costs.
Reflecting lower anticipated FX headwinds but a tightening of local-currency revenue growth towards the lower end of the prior range, management maintained the midpoint of its FY23 reported revenue guidance and adjusted operating margin targets while increasing its EPS guidance.
Helped by strength in Managed Services, bookings growth accelerated to 17% Y/Y on a local-currency basis from 6% last quarter.
The analyst boosted FY23 and FY24 estimates to reflect a premium to similar growth peers but justified, given the continued demand for digital services, ACN's unique position to deliver at scale, and continued shareholder-friendly capital return policies.
BMO Capital analyst Keith Bachman maintains Accenture with a Market Perform and raises the price target from $310 to $327.
Better-than-expected bookings, notably in Consulting, highlighted Accenture's quarter.
Accenture discussed better win rates as the primary driver of outperformance in bookings, not pull-in. Management noted that Q3 bookings would be sequentially lower, consistent with prior years' May quarter trends. Bachman thinks there remains uncertainty around Consulting bookings growth and implications for FY24 development.
Bachman believes it has reached closer to a bottom in Consulting bookings growth though it still acknowledges some related revenue growth uncertainty for FY24.
Further, the analyst thinks Accenture has some room in margins with the workforce reduction, even if it continues to add a modest headcount.
The analyst notes that strategy and Consulting will likely remain under pressure for the remainder of the year and was the primary driver of the cut.
Overall, Bachman retains a positive bias.
Price Action: ACN shares traded lower by 0.77% at $269.56 on the last check Friday.

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