Accenture's Raised Outlook Fails To Ease Fiscal 2026 Softness Worries: Analyst

Guggenheim analyst Jonathan Lee maintained a Buy rating on Accenture ACN with a lowered price forecast of $335 from $360 on Monday.

Accenture reported third-quarter earnings of $3.49 per share, topping the analyst consensus estimate of $3.31.

The company reported sales of $17.7 billion, slightly exceeding the analyst consensus estimate of $17.30 billion. Sales increased 8% in U.S. dollars and 7% in local currency.

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Accenture narrowed its fiscal year 2025 revenue growth outlook to 6%-7% (prior 5%-7%) in local currency. The company forecasts 2025 diluted earnings of $12.77-$12.89 (prior $12.55-$12.79) per share, compared to the consensus of $12.75.

Ongoing business momentum allowed management to raise its fiscal 2025 revenue growth outlook, though operating margin expansion expectations ticked lower, in line with Lee’s preview.

Management highlighted a “strong pipeline” driven by enterprises looking to “leapfrog” technology investments. They also noted improvements in the pricing environment, a significant positive shift from prior quarters.

The analyst said that raising Accenture’s fiscal 2025 revenue growth outlook does little to ease investor concerns about potential softness in fiscal 2026.

The analyst expects investors to remain skeptical of Accenture’s fiscal 2026 growth despite these factors. This skepticism stems from several concerns: new bookings of $19.7 billion were down 6.5% constant currency, headcount saw a 130 basis point sequential decline, and early signs of DOGE-related headwinds are expected to impact revenue. Specifically, these headwinds are projected to be a 2% headwind on fiscal fourth-quarter revenue growth.

Accenture’s consolidated growth for fiscal 2026 will likely be impacted by a prudent decision to make fewer acquisitions this year. According to Lee, this is because potential targets aren’t meeting their economic hurdles, a “market condition” dynamic. Management is now targeting an approximately 2% inorganic contribution for future years.

The analyst said that to meet the clients’ needs better, management announced a reorganization to streamline its go-to-market (GTM) structure and reduce silos across the organization, consolidating businesses under its Reinvention Services business unit.

While Lee acknowledges that Accenture will likely benefit from long-term tailwinds like widespread technological adoption and cost-cutting initiatives, he believes investor fears about estimate risk, whether cyclical or structural, are unlikely to abate in the near term.

Lee adjusted his fiscal 2025 estimates for Accenture, raising revenue to $69.38 billion (from $68.95 billion) and adjusted EPS to $12.85 (from $12.71). For fiscal 2026, he also increased revenue to $72.84 billion (from $72.37 billion) and adjusted EPS to $13.93 (from $13.91).

Price Action: ACN stock was trading higher by 1.28% to $289.03 at last check Monday.

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