J.P. Morgan Reiterates Overweight on Accenture plc (ACN)

J.P. Morgan is out with a research report this morning, where it reiterates its Overweight rating on Accenture plc ACN; it also raised its price target to $45.00, from $44.00. The JPM analysts cited the company's upcoming earnings report, where they are not expecting any surprises to ACN's F4Q and FY11 results. They are reiterating their 7-10% local FX revenue growth goal, as the demand environment remains favorable. The analysts believe that the results will also justify the stock's recent run higher and also see potential upside to the company's EPS estimates. Recently management outlined several levers the company can pull to expand margins, including: 1. Pricing 2. Tweaking base versus variable compensation 3. Industrializing its deliver and utilizing the Global Delivery Network (GDN) to improve contract profitability 4. Streamlining selling costs As for valuation, the analysts remarked, “Our ACN price target of $45 applies a 14.5x multiple to our CY11E EPS of $3.09. ACN is currently trading at 15x our CY10E EPS while peers are trading at 14x. Over the last year, ACN has traded at a -14.5% discount relative to its peers on NTM P/E. We estimate ACN earnings will grow at 9.4% over the next three years (2009-12) and our price target implies a 54.5% premium to the earnings CAGR.”