Accenture Plc (NYSE: ACN) has lost more than 25% over the past three months but a Deutsche Bank analyst warns against hoping for a swift recovery.
ACN does, however, pay a dividend yield of 1.71% at writing.
Accenture stock has downside to $295
Bryan Keane downgraded the professional services company to “hold” in a recent research note. His $295 price objective suggests about a 3.0% downside from here.
The analyst is dovish on Accenture stock as he expects it to continue to face significant obstacles in the near future.
A notable shift in ACN’s market position sits right at the heart of his not-so-exciting view.
Accenture has historically been a company that consistently improved its market share. But now it seems to be losing ground to competitors in an already strained IT Services space, he told clients in May.
Accenture missed revenue estimates in Q3
Accenture Plc reported $16.47 billion in revenue for its third financial quarter on Thursday – down a more-than-expected 1.0% versus a year ago. According to Julie Sweet – chief executive of the New York listed firm:
We achieved two significant milestones this quarter – with $2 billion in Generative AI sales year-to-date and $500 million in revenue year-to-date – which demonstrates our early lead in this critical technology.
Still, Deutsche Bank analyst Bryan Keane does not expect artificial intelligence to meaningfully boost revenue for ACN in the short or medium term.
Other investment firms including Barclays, Citi, and Baird, while still bullish on Accenture stock, have trimmed their respective price objectives on it fairly recently.
Why else is Deutsche Bank dovish on ACN?
Keane took a more cautious stance on Accenture shares as he’s convinced that current market estimates may need further downward adjustments.
He lacks confidence that ACN will be able to maintain its competitive edge in a rapidly evolving tech landscape. The Deutsche Bank research note added:
We expect the debate on if Gen AI could be a negative for IT services vendors to continue to weigh on industry multiples.
Accenture now forecasts its adjusted per-share earnings to fall in the range of $11.85 and $12 this year versus analysts at $12.09. Revenue is seen coming up 1.5% to 2.5% in fiscal 2024.
ACN also expects up to $9.3 billion of free cash flow and adjusted operating margin at 15.5% for the full year. Its quarterly report arrives only a day after Accenture said it’s buying Italy’s Fibermind to expand European footprint.
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