Accenture Has 'Clearly Pulled Ahead Of The Pack'

Barclays’ Darrin D. Peller believes Q3 results highlighted the strength across Accenture Plc’s ACN vertical, as well as the company’s ability to drive topline growth amidst a challenging macro environment.

Peller maintained an Equal-Weight rating on the company, while raising the price target from $112 to $128.

Q4 Strength

With “The New” accounting for 40 percent of Accenture’s total revenues in FY 2016, the analyst continued to be “impressed with ACN's persistent strong double-digit growth, led by Digital services,” which grew 30 percent in LC.

During Q4, the strength in the Financial Services business was especially notable, given the recent cautious commentary from peers.

In addition, Accenture reported double-digit growth in Products, despite the sequentially tougher compares. Peller believes that this indicates continued adoption of “The New” across industries.

“This quarter solidifies our view that ACN is well ahead of its peers in next generation solutions. Its sustained focus and investment in "The New" gives us further confidence that ACN will continue to gain market share as clients continue to shift spend toward growth initiatives,” the analyst went on to say.

Guidance

Accenture guided to top line growth of 5-8 percent LC for FY 2017, with flat FX impact. GAAP diluted EPS was guided to $5.75-$5.98, representing 8-12 percent year-on-year growth.

For FQ1 2017, the company guided to revenue of $8.40-$8.65 billion, representing 5-8 percent growth and reflecting flat FX impact.

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