Morgan Stanley's Bold Bet On Accenture, Builds Buy Case

Morgan Stanley analyst James Faucette maintained a Buy rating on Accenture Plc ACN with a price target of $369, up from the prior $355.

Faucette highlighted that ACN remained his favorite IT Services stock as consistent M&A execution reassured the company's ability to stay front-footed with new technologies. 

He noted that an undemanding 2Q outlook and a reiterated FY24 guide contemplate a steeper-than-expected back-half ramp, likely buoyed by outsized M&A revenue contribution. 

Also Read: Accenture Invests In AI Talent: Adds Ammagamma To Strengthen European AI Capabilities

The analyst pointed out that FY24 M&A purchase multiples are trending with FY23, underscoring ACN's willingness to maintain spending discipline in a challenged macro. 

Faucette highlighted that bookings' strength reassured investors, as Managed Services saw +20% Y/Y growth, while Consulting saw a slight Y/Y uptick of 6%. 

The analyst has confidence in ACN's ability to acquire quality assets at attractive valuations in a challenged macro, which will help reaccelerate organic growth. 

Despite the potential for near-term softness, Faucette believed that ACN is among the best-positioned IT Services companies to maintain technology leadership and optionality through balanced acquisitions and capital return.

Price Action: ACN shares traded lower by 0.33% at $340.38 on the last check Wednesday.