Accenture's Raised Outlook Fails To Ease Fiscal 2026 Softness Worries: Analyst

Core Viewpoint - Guggenheim analyst Jonathan Lee maintains a Buy rating on Accenture with a lowered price forecast of $335 from $360, following the company's third-quarter earnings report which exceeded analyst expectations [1][2]. Financial Performance - Accenture reported third-quarter earnings of $3.49 per share, surpassing the analyst consensus estimate of $3.31 [1]. - The company achieved sales of $17.7 billion, slightly above the consensus estimate of $17.30 billion, with an 8% increase in U.S. dollars and a 7% increase in local currency [1]. Revenue Growth Outlook - Accenture narrowed its fiscal year 2025 revenue growth outlook to 6%-7% in local currency, up from a prior range of 5%-7% [2]. - The company forecasts diluted earnings for 2025 to be between $12.77 and $12.89 per share, compared to the previous estimate of $12.55 to $12.79, aligning with the consensus of $12.75 [2]. Business Momentum and Challenges - Management highlighted a "strong pipeline" driven by enterprises seeking to enhance technology investments and noted improvements in the pricing environment [3]. - Despite the positive outlook for fiscal 2025, concerns remain regarding potential softness in fiscal 2026, particularly due to a 6.5% decline in new bookings in constant currency and a sequential decline in headcount [4]. Strategic Decisions - Accenture's growth for fiscal 2026 may be affected by a decision to limit acquisitions this year, as potential targets are not meeting economic hurdles [5]. - The company is targeting an approximately 2% inorganic contribution for future years [5]. Organizational Changes - To better meet client needs, Accenture announced a reorganization to streamline its go-to-market structure and reduce silos, consolidating businesses under its Reinvention Services business unit [6]. Long-term Outlook - While long-term tailwinds such as technological adoption and cost-cutting initiatives are expected to benefit Accenture, investor fears regarding estimate risks are likely to persist in the near term [7]. Adjusted Estimates - Analyst Lee adjusted fiscal 2025 estimates for Accenture, raising revenue to $69.38 billion from $68.95 billion and adjusted EPS to $12.85 from $12.71 [8]. - For fiscal 2026, revenue estimates were increased to $72.84 billion from $72.37 billion, with adjusted EPS rising to $13.93 from $13.91 [8].