Accenture Would Become More Interesting At Less Then $110/Share, Says Baird

As shares of Accenture Plc ACN are trading slightly less than $110, Baird said they would be more interested if the stock trades less than $110 per share. The analysts comments came on the back of a deal to buy dgroup. The brokerage has a Neutral rating and $125 price target on shares.

The analysts estimated the yearly revenue accretion to be $12-$15 million from the acquisition. That means it would be less than 0.1 percent of the total revenue. However, the analysts expect the acquisition to be a part of ‘the new' for Accenture since it was approaching 40 percent of the total revenue.

The brokerage noted that Accenture has made a number of acquisitions in the recent past. Between the years 2003 and 2012, the annual spending on acquisitions ranged between ~$20 million and ~$300 million. This has jumped to $700-$800 million in the years 2013–2015.

In 2016, Accenture has forecasted to spend $900-$1,000 million for acquisitions. Of this, the company has already spent $750 million in the first half of the current year. The analysts said, "Over the past couple years, acquisitions have added ~1-1.5% to annual revenue growth. Current F2016 guidance includes the expectation for ~2% revenue contribution from acquisitions (seems mildly conservative)."