Accenture (ACN) share price forecast: Is it time to buy the dip?
Accenture stock value rose in mid-December following the release of the firm’s financial results covering the first quarter of the 2022 fiscal year. The consulting company raised its guidance for both revenues and earnings for the full year amid favorable market conditions.
Back on 16 December when these results came out, the management’s upbeat tone led to a 7% single-day rally. However, positive momentum did not last as shares tumbled from an all-time high of $417 to their current level of $335.6.
An expected shift in macro conditions, including multiple potential interest rate hikes from the US Federal Reserve (Fed) and other major central banks along with the tapering of their asset purchase program, rattled the market and prompted a risk-off move.
Higher inflation in the US has led to a selloff in the bond market, with US Treasury yields climbing to their highest levels since the pandemic started.
All of these factors are weighing on the valuation of risky assets such as equities. Accenture stock, despite its fundamental strength, is not exempt from the impact of this gloomy macro environment.
In this article, we will be assessing the price action, fundamentals and most recent Accenture stock news to outline plausible scenarios for the ACN stock.
Accenture stock analysis: Price drivers and technical view
The decline that ACN stock has experienced in the past 30 days has pushed the price near the 200-day simple moving average for the first time since October last year.
Trading volumes have been above the 10-day average for the past two weeks at least, while momentum oscillators are dropping to their worst levels in months.
The relative strength index (RSI) has entered oversold territory at 26 – the worst reading since the 2020 pandemic crash – while the moving average convergence divergence (MACD) is deep in negative territory.
The ascending price channel, in play since March 2021, has been broken, which could favour a bearish ACN stock forecast. If the decline leads to a break of the 200-day simple moving average, the downtrend could accelerate.
The following are some areas of support that investors could keep an eye on if the decline continues:
$330 - 200-day simple moving average
$315 – horizontal support
$278 – horizontal support
Accenture stock fundamental analysis: Latest earnings
On 16 December, Accenture reported its financial results covering the first quarter of its 2022 fiscal year.
Back then, the company reported revenues of $15bn, resulting in a 27% jump compared to the same period a year ago.
Bookings surged 30% compared to the first quarter of the 2021 fiscal year at $16.8bn. New consulting bookings grew by 56% and outsourcing bookings were up 44%.
Revenues in all regions experienced a similar increase, while the products and communications, media and technology sectors saw the most upside in percentage terms during the period.
Gross margins fell 20 basis points at 32.9% on a year-on-year basis, while Accenture’s operating margin increased 20 basis points to 16.3% compared to Q1 2021.
Net income for the quarter landed at $1.82bn, resulting in diluted GAAP earnings per share of $2.78 – a 20% increase compared to a year ago.
For the entire 2022 fiscal year, the company expects to see revenues grow by 19% to 22%. These figures were significantly better than the previous range of 12% to 15% the management had guided for.
In regards to its solvency, Accenture has nearly no long-term debt and $2.7bn in lease liabilities. The company ended the first quarter of the 2022 fiscal year with $5.6bn in cash and equivalents and total assets of $43.7bn, including $12.4bn in goodwill.
Accenture share price prediction: Analyst sentiment
According to data compiled by MarketBeat (as of 25 January), the consensus rating for Accenture was a ‘buy’ from a total of 25 analysts covering the stock. From that group, 18 held a ‘buy’ rating while the remaining seven were neutral.
The average price target stood at $389.03 a share, resulting in a potential 16% upside based on the last closing price of $339 (as of 25 January). The highest Accenture stock price target was at $475 a share, while the lowest was at $285.
Most financial services companies boosted their price targets for the stock back in December amid the management’s overall upbeat tone about the outlook and solid earnings results.
Commenting on the Accenture stock performance and potential future, David Jones, Chief Market Strategist at Capital.com, said:
Accenture (ACN) share price forecast: Targets for 2022, 2025 and 2027
Several algorithm-based forecasting services shared Accenture stock predictions for the next few years.
The Accenture share price forecast from Wallet Investor, as of 25 January, suggested the stock could average $405.31 by the end of 2022, and $469.43 by the end of 2023. It further predicted ACN to climb to $598.18 by the end of 2025. Although the service did not provide targets for 2030, its five-year ACN stock forecast expected the stock to reach $660.48 in January 2027.
Gov Capital estimated that the price of Accenture stock could average $454.35 a share by the end of December 2022, rise to $1,296.81 by the end of 2025 and hit the $1,739.05 mark in January 2027.
These predictions are based on an assessment of the Accenture historical share price. They should not be taken as a recommendation to buy or sell the stock. Past performance is no guarantee of future results. Stock prices can go down as well as up. It’s important to bear in mind that analysts’ forecasts can be wrong.
Do your own research and always remember your decision to trade depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest money that you cannot afford to lose.
FAQs
Is Accenture a good stock to buy?
From a fundamental perspective, Accenture is a strong company with a robust balance sheet and revenue, cash flow and earnings generation capacity. Still, its short-term outlook was bearish from the technical perspective at the time of writing (25 January).
Whether ACN is a suitable investment depends on your own investment objectives – and the opinion you form based on your own research. Remember, it’s important to reach your own conclusion about the company’s prospects and likelihood of achieving analysts’ targets.
Why has the Accenture share price been falling?
A shift in macro conditions has been primarily driving the latest decline in the price of Accenture stock. Market participants were expecting an increase in interest rates in the United States amid inflationary pressures, and the imminent end of the US Federal Reserve’s asset purchase program later this year has also prompted some negative sentiment.
Will Accenture stock go up or down?
According to the forecasting services cited above, even though the short-term outlook for Accenture stock was bearish, its mid to long-term outlook was bullish, as of 25 January. These predictions were drafted based on an assessment of the ACN historical price trend. However, past performance does not guarantee future results. You should always do your own research before making any investment decision.
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