Accenture (ACN) Surges After 'Very Strong' Q3 Results, Broadly Bullish Results Likely to Continue Driving Shares Higher Says Analyst
Shares of Accenture (NYSE: ACN) rose 4% in pre-open Thursday after the tech consulting and services company reported better-than-expected third-quarter earnings and revenue results, as well as strong guidance.
ACN reported adjusted earnings of $2.4 per share for the quarter that ended on May 30, 26% up from the year-ago period, while revenue climbed 21% to $13.3 billion. This compares to analysts’ expectations of adjusted earnings per share of $2.24 per share on revenue of $12.77 billion.
“Our outstanding financial results reflect our continued momentum driven by the demand for digital transformation, the depth and breadth of our client relationships with the world’s leading companies, our talented people and the strength of our business across geographic markets, industries and services,” Julie Sweet, Accenture’s chief executive officer, said.
“We are particularly pleased with our ability to continue to invest significantly in our business and our people. This includes acquisitions of 39 innovative companies that we have announced for the fiscal year to date, bringing us scale and new or expanded capabilities. To continue to provide vibrant career paths, we have promoted a record 117,000 people, including almost 1,200 managing directors so far this fiscal year in recognition of their leadership, excellence and commitment to creating value for our clients, people, shareholders, partners and communities.”
As for the following fourth quarter, Accenture estimates revenue of $13.3 billion, compared to analysts’ expectations of $12.48 billion.
A “blowout” quarter is how Cowe analyst Bryan Bergin described ACN’s Q3 results. Bergin has an “Outperform” rating and a $305.00 per share price target on the stock.
“ACN posted a blowout 3Q & raised FY22 outlook across the board with 4Q targets above Street high ests (4Q growth 17-21% CC y/y). Bookings grew significantly +39% y/y w/ strength in Consulting + Outsourcing. Margin outlook raised (+40 bps y/y) with no indication of talent constraints, and it's feeding FCF with another raise of $1Bn ($8.0-8.5Bn). Broadly bullish results likely drive shares higher,” the analyst said in a note to clients.
Similarly, David Grossman has praised ACN for delivering a “very strong quarter and outlook.” He rates the stock as “Buy” with a $305.00 per share price target.
“ACN reported a solid F3Q beat and raise with fundamental strength across their business model. As noted in our preview (here), the demand environment is very strong as large global enterprises accelerate digital transformation efforts coming out of the pandemic. While this dynamic should benefit the entire sector (EPAM, INFY, EXLS, IBM, GBS, DXC in our coverage), the ability to access resources will limit success for some. Also noted in our preview, we anticipated a strong quarter to some degree telegraphed by the substantial increase in acquisition activity FYTD with acceleration since the beginning of F3Q as the company scrambled to staff for accelerating client demand,” he wrote in a memo on ACN.