Accenture (ACN), a global professional services company, is set to release fiscal fourth-quarter 2021 earnings on September 23.
Over the past year, shares of the company have gained around 40%, now trading at around $331. Accenture’s cloud and digital marketing suite should further grow over time as a result of acquisitions and collaborations. Thus, I am bullish on the stock.
Strong earnings may boost Accenture stock even more, so let’s see what analysts are forecasting.
Analysts on average expect Accenture to post earnings of $2.19 per share and revenues of $13.42 billion in fiscal Q4.
Meanwhile, the Earnings Whisper number, or the Street’s unofficial view on earnings, stands at $2.31 per share. (See Accenture Dividend Date and History on TipRanks)
Accenture’s Prior Quarter Snapshot
Accenture reported a strong fiscal third quarter, with revenues and earnings nearly doubling over the prior-year quarter.
Revenues of $13.3 billion were better than the $12.54 billion forecast by Wall Street. This is roughly a 21% increase over the previous quarter’s revenue, thanks to rising demand for digital transformation.
Meanwhile, earnings came in at $2.40 per share, up 26% year-over-year and above the $2.23 per share consensus forecast.
Points to Watch
During the quarter, Accenture took steps to penetrate new markets and diversify its product portfolio through acquisitions and partnerships.
For one, Accenture completed the purchase of Cloudworks, a Toronto-based supplier of Oracle Cloud installation services. The company’s cloud capabilities and services to clients are likely to improve as a result of this acquisition.
Further, through Accenture Ventures, the business also made a strategic investment in ixlayer, a supplier of technology-based diagnostic testing solutions. As a result of the agreement, Accenture’s footprint in the virtual healthcare industry is expected to have strengthened, adding new clients to its customer base.
In addition, Accenture formed a strategic collaboration with Kubota Corporation, a Japanese machinery manufacturer, to help the latter improve and accelerate its digital transformation. The goal of the collaboration is to provide a platform for developing solutions that will improve food, water, and environmental sustainability.
These transactions should have helped the company to expand its top-line growth in the upcoming quarter.
Analysts’ Recommendation
Ahead of the Q4 earnings release, David Koning of Robert W. Baird maintained a Hold rating on the stock but increased the price target to $350.00 from $298.00. This implies 5.7% upside potential to current levels.
Koning is positive about Accenture’s solid business momentum, stating, “We view the franchise as very strong, the balance sheet clean, and secular tech winner over many years given the digital/cloud focus.”
On the other hand, he feels that the risk-reward profile is still balanced at present levels and so wants to stay on the sidelines for the time being.
Other analysts are more optimistic than Koning. Accenture stock commands a Strong Buy consensus rating, based on 16 Buys and 4 Holds.
As for price targets, the average ACN price target of $343.67 implies 3.8% upside potential from the current levels.
Disclosure: On the date of publication, Shalu Saraf had no position in any of the companies discussed in this article.
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