Accenture Plc (NYSE: ACN) is in focus this morning after announcing plans of buying Fibermind – a network services company based out of Palermo, Italy.
The Irish professional services giant completed its acquisition of Parsionate as well on June 6th.
Details of Accenture-Fibermind agreement
Accenture Plc did not disclose what it’s willing to pay for Fibermind on Wednesday.
Accenture did confirm, however, that the proposed acquisition is subject to meeting customary closing conditions, including regulatory clearances. Mauro Macchi – its chief executive said in a press release today:
As a result of the acquisition, we will expand our capabilities to offer end-to-end network engineering services, delivering higher quality, greater innovation, and more rigorous cost management to our clients.
Accenture stock that currently pays a dividend yield of 1.81% is currently down more than 25% versus its year-to-date high in early March.
Why is $ACN buying Fibermind?
Acquiring Fibermind will enable Accenture Plc to expand its footprint in Europe and accelerate growth in what is a strategic sector for Italy.
The New York listed firm is convinced the acquisition it announced today complements ones it previously made in Europe, including AFD.TECH, Arca, and umlaut. According to Roberto Pagella – the head of Italian operations at $ACN:
The synergies with Fibermind will allow us to create a centre of excellence in engineering services where technology and data enhance and amplify human skills and knowledge.
The announcement arrives only a day before Accenture Plc is scheduled to report its financial results for the third quarter.
What to expect from Accenture Q3 earnings?
Consensus is for Accenture Plc to report $16.54 billion in revenue on $3.15 a share of earnings for its Q3.
Earlier this week, Ramsey El-Assal – a Barclays analyst maintained Accenture stock at “overweight” but lowered his price target from $390 to $350. The new price objective, nonetheless, suggests well over 20% upside from here.
El-Assal trimmed his price target on $ACN due to challenges in consulting and tech services.
Note that Barclays is not the only investment firm that’s constructive on Accenture stock at the moment. In fact, analysts at Citigroup are much more bullish and see upside in shares of the Dublin-headquartered firm to $400 that signals potential for a whopping 40% upside from here.
Still, our market analyst Crispus Nyaga talked of a few challenges in the face of ACN on Wednesday:
There are also concerns that Accenture is still highly overvalued. While its stock has plunged hard, it still trades at a forward PE multiple of 24.50, which is higher than the forward S&P 500 multiple of 21. Its forward EV to EBITDA ratio of 14.45 is also higher than the sector median of 14.
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