Accenture finished 2016 with a strong 9 percent growth rate in the fourth quarter, driven by Consulting, "the New" (digital, cloud, security), and the products segment.
"Much as we admire and applaud Accenture's track record of performance, we are unwilling to recommend that new money be put to work in a name that delivers ~10 percent EPS CAGR but trades at 20x forward earnings," analyst Ashwin Shirvaikar wrote in a note.
In fact, Shirvaikar prefers focused emerging technology plays such as EPAM Systems Inc EPAM or platform plays such as WNS (Holdings) Limited (ADR) WNS and Amdocs Limited DOX.
In the large cap space, the analyst would put his money on Cognizant Technology Solutions Corp CTSH that "deliver comparable total return at a considerably cheaper multiple."
Meanwhile, the positives in Accenture's results include no FX impact in guidance, strong performance and commentary in Financial Services, and dividend increase. On the flip side, the company Indicated decelerating growth for all operating segments.
However, Shirvaikar raised his price target to $120 from $116 on the increased EPS.
Shares of Accenture were seen trading at $122.57, up 0.76 percent, at time of writing. Cognizant was down 14.95 percent at $46.73.
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