Last Update04 Oct 25Fair value Decreased 8.82%
Accenture's analyst price target has been revised downward from approximately $305 to $278 per share. This change reflects recent reductions in projected revenue growth rates and industry-wide valuation multiples, as analysts cite persistent margin pressures and a mixed demand outlook despite ongoing investments in generative AI.
Analyst Commentary
Following Accenture's latest quarterly results and fiscal 2026 outlook, street research reveals a mix of optimism regarding the company's strategic direction and continued caution on several fronts. Analysts broadly agree that Accenture's position in the evolving generative AI landscape is promising, though concerns linger over near-term headwinds.
Bullish Takeaways
- Bullish analysts highlight Accenture's solid Q4 performance and the return to year-over-year growth in bookings, particularly with generative AI projects exceeding expectations.
- Several see the company's ongoing investments and business optimization initiatives as positioning Accenture well for future growth, especially as more generative AI projects move from proof of concept into full production.
- Positive pricing trends and improved contract profitability in recent quarters are seen as evidence of effective execution and value delivery to clients, even amid a challenging macros environment.
- Some analysts point to the company's resilient guidance and ability to deliver results in line with or above consensus. This underscores Accenture's strong competitive positioning within IT services.
Bearish Takeaways
- Bearish analysts continue to flag persistent gross margin pressures. They note that recent restructurings raise concerns about the durability of management's profitability algorithm.
- There is caution around tepid industry-wide IT services spending outlooks for fiscal 2026, with some analysts expecting spending and growth to remain range-bound as potential AI-related headwinds increase.
- Sentiment remains cautious given concerns that revenue growth expectations for the upcoming quarters may still be too high relative to consensus and market uncertainty.
- Ongoing restructuring efforts and the frequency of these changes are cited as indicative of underlying challenges in sustaining long-term margin expansion.
What's in the News
- Accenture and WPP have engaged in high-level discussions about a potential merger deal, according to Campaign. (Campaign)
- Accenture announced a quarterly dividend increase to USD 1.6300 per share, payable in November 2025. (Key Developments)
- The company provided fiscal 2026 guidance, forecasting full-year revenue growth of 2% to 5% in local currency and GAAP diluted EPS of $13.19 to $13.57. (Key Developments)
- Accenture completed the repurchase of 1.6 million shares between June and August 2025 for $474 million as part of its long-term buyback program. (Key Developments)
- Accenture and Google Cloud are collaborating with Eneva to modernize and optimize operations using cloud and AI technologies in Brazil's energy market. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target: Reduced from $305.23 to $278.32 per share, reflecting a notable downward adjustment.
- Discount Rate: Remained essentially unchanged, moving from 9.60% to 9.60%.
- Revenue Growth: Lowered from 6.47% to 5.87%, which indicates a more conservative growth outlook.
- Net Profit Margin: Increased modestly from 12.21% to 12.48%, which suggests slight expectations for margin improvement.
- Future P/E: Decreased from 24.52x to 21.77x, which signals less aggressive forward valuation assumptions.
Key Takeaways
- Strategic investments in Gen AI and acquisitions in high-growth areas may bolster future revenue as digital transformations gain traction.
- Enhanced cloud and security offerings alongside shareholder returns through repurchase programs could drive long-term revenue and EPS growth.
- Accenture faces pressure from slowing federal revenue, geopolitical uncertainties, margin challenges, currency fluctuations, and competitive market pricing impacting growth and profitability.
Catalysts
About Accenture- Provides strategy and consulting, industry X, song, and technology and operation services in North America, Europe, the Middle East, Africa, and internationally.
- Accenture's significant investments in Gen AI, reflected by $1.4 billion in new bookings and $600 million in revenue for Gen AI solutions this quarter, suggest potential for strong future revenue growth as AI-driven transformations become more prevalent.
- The strategic focus on large-scale transformation projects, with Accenture being the partner of choice for significant reinvention initiatives, is likely to boost future revenue and consolidate market position, particularly as businesses continue to prioritize digital transformations.
- Accenture's ongoing strategic acquisitions, with over $250 million deployed this quarter, particularly in high-growth areas like Industry X and Gen AI, could drive revenue growth as these investments begin to yield returns.
- The focus on cloud and security, which saw double-digit growth this quarter, indicates continued strengthening of core offerings that are likely to support robust revenue growth and potentially improve net margins as higher-margin services expand.
- Accenture's ongoing share repurchase program, with $2.4 billion returned to shareholders this quarter, and significant cash flow generation indicate a focus on increasing shareholder value, which could support earnings per share (EPS) growth despite revenue headwinds.
Accenture Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Accenture's revenue will grow by 6.0% annually over the next 3 years.
- Analysts assume that profit margins will increase from 11.6% today to 12.3% in 3 years time.
- Analysts expect earnings to reach $10.0 billion (and earnings per share of $16.15) by about September 2028, up from $7.9 billion today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 25.7x on those 2028 earnings, up from 19.8x today. This future PE is lower than the current PE for the US IT industry at 29.0x.
- Analysts expect the number of shares outstanding to decline by 0.32% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 9.59%, as per the Simply Wall St company report.
Accenture Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- Accenture's federal revenue is experiencing a slowdown due to new administration policies and procurement actions, creating uncertainty in their federal business and potentially impacting overall revenue growth.
- Increased geopolitical and economic uncertainty on a global scale may affect client spending decisions and extend sales cycles, which could slow revenue growth.
- The declining operating margin, driven by higher subcontractor costs and past optimization actions, could pressure net margins if these trends continue.
- Currency fluctuations have had a negative effect on revenues, and further foreign exchange impacts could influence earnings adversely.
- Competitive markets and stable pricing pressure may limit the company's ability to expand its margins, impacting overall profitability growth.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $316.049 for Accenture based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $372.0, and the most bearish reporting a price target of just $240.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $81.5 billion, earnings will come to $10.0 billion, and it would be trading on a PE ratio of 25.7x, assuming you use a discount rate of 9.6%.
- Given the current share price of $251.99, the analyst price target of $316.05 is 20.3% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
How well do narratives help inform your perspective?
Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
