By Sam Boughedda
Accenture (NYSE:ACN) was cut to Underweight from Neutral, with its price target kept instated at $268 per share by Piper Sandler analysts on Monday.
They told investors in a note that Accenture, which will release earnings for its latest quarter on Friday, is being downgraded due to a challenged tech spend environment for 2023.
"While the company may have good 1Q results/reiterate FY23 targets, we expect management to have an increased tone of caution. 1H estimates appear reasonable, but there is a modicum of risk to 2H," wrote the analysts. "IT Services is late-cycle; and software companies have started to indicate that 2023 tech is likely to be pressured. With the pandemic pulling forward tech spend, enterprises are looking to evaluate/measure ROI elevated spend over the past 2-years."
In addition, the analysts revealed that the firm's checks with executives "indicate that 2023 themes are 'prioritizing cost savings,' 'shorter term projects,' 'clear ROI,' etc."
"While we are downgrading ACN, we acknowledge that it has a diverse revenue base, deep client relationships and a good business model. We prefer INTU (1-Year: -40%) vs. ACN -24% as a core large-cap tech holding. Further, ACN trading 24.9x NTM vs. 5-year average of 26.0x," they concluded.