Accenture Stock (NYSE:ACN)
Following TD Cowen’s downgrading of Accenture (NYSE:ACN) shares to Market Perform from Outperform, the stock price of the Irish business fell by almost 2% on Friday. TD Cowen cited “further deterioration in demand signals” as the reason for the reduction.
Analysts at the business said that despite its recent outperformance related to generative AI hype, and little NT return, Accenture continues to be a Services mainstay with unparalleled size and diversity.
Accenture stock price objective was cut to $300 because the company now sees a less favorable risk/reward situation.
With many warning signs in the demand sector, experts needed help identifying grounds for near-term gain. Bookings expectations for the fourth quarter are subdued (flat Q/Q implies down MSD Y/Y), NT billable hiring is almost flat, S&C uncertainty persists with some pricing compression, and other areas of moderation, such as short-cycle S&C and systems integration work, are increasingly commonplace.
According to the experts, Q4 is anticipated to see a deceleration in the strength in Operations, which has been a source of strength, with HSD increase compared to DD growth in Q2 and Q3. Analysts agree that this establishes a more cautious baseline for FY24. While weakness may not last long, more losses are possible if macroeconomic conditions remain volatile.
According to the company, Accenture stock valuation has risen because of rising big-cap tech stocks and projected generative AI tailwinds. Still, the NT’s significance is unlikely adequate to overcome clients’ wider conservatism due to uncertainty tied to the macro picture.
While the future of GenAI seems promising, experts are becoming more pessimistic about its impact on outcomes. They are thus taking a wait-and-see approach for the next six months.
Analysts anticipate that share prices will stay very stable within a narrow range, and they worry about the possibility of multiple compression if investors lose faith in generative AI or the softer landing scenario.
The analysts feel that the higher multiple needs to appropriately discount the decelerating medium-term organic growth path and the uncertainty about the near-term demand environment for IT services. This leads them to conclude that the shares have an unfavorable risk-reward.
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Author Shariq Khan 
