A Solid Q4 Accentuates The Bull Case For Accenture

Accenture Plc ACN reported its Q4 results ahead of expectations and its 2017 guidance reflects 8-12 percent growth in adjusted EPS. There is further potential upside in the company’s shares, with revenue and EPS growth, Argus’ Jim Kelleher said in a report. He maintained a Buy rating on Accenture, while raising the price target from $128 to $138.

Accenture reported Q4 revenue of $8.5 billion, representing 8 percent growth. EPS came in at $1.31, excluding a onetime gain, up 14 percent y/y and ahead of the Street expectation of $1.30.

“The company continue to show extremely strong trends in its consulting category, with revenue up 18% and bookings up 11%,” analyst Kelleher wrote. He added that the group’s overall operating profit grew 9 percent y/y, reflecting ongoing efficiency gains.

Looking Ahead

Accenture guided to 2017 EPS of $5.75-$5.98, reflecting 8-12 percent growth. Kelleher expects the company to benefit from rising demand, as an increasing number of customers move to “new services,” such as digital, cloud and security services, which currently contributes 40 percent of revenue.

“Companies are turning to Accenture as they seek to align with major technology trends including cloud, big data, and “everything as a service.” Despite their market-leading performance year-to-date, ACN shares appear primed for additional appreciation, in line with rising revenue and EPS,” the analyst wrote.

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