Accenture stock price has imploded this year as concerns about its US government business continued. ACN has dropped in the last six consecutive weeks and is hovering near its lowest level since July last year. It has plunged by over 25% from its highest level this year, making it one of the top laggards in the industry.
DOGE is having an impact on Accenture
Accenture share price has crashed in the past few months as concerns about the US government spending jumped. The main concern is that the Department of Government Efficiency (DOGE) has embarked on cost cuts across the federal government.
As part of these cost cuts, the department has focused on consulting companies like Accenture, Booz Allen Hamilton, and IBM. Accenture, which makes billions from the US government, has hinted that these cuts will hit its business. That explains why the Accenture stock price has plunged since 8% of its revenue comes from the US.
The impact of all this is that other governments may decide to embrace Elon Musk’s cost-cutting in a bid to boost their efficiency. Accenture makes billions of dollars each year from global governments. In a note, Julie Sweet, the CEO said:
“The new administration has a clear goal to run the Federal government more efficiently. Many new procurement actions have slowed, which is negatively impacting our sales and revenue. The General Service Administration has instructed all federal agencies to 4 review their contracts with the top 10 highest-paid consulting firms contracting with the U.S. government.”
Still, there are signs that these fears are stretched, which explains why the company did not downgrade its forward guidance in its recent results. That’s because more consulting opportunities will come up, especially as the government continues its digitizing process.
Accenture stock price has also crashed because of the ongoing geopolitcal issues because of Donald Trump’s tariffs. These tariffs mean that companies may start cutting costs and evaluating their contractors.
ACN reported weak earnings
The most recent earnings published this week showed that Accenture’s business grew modestly because of generative artificial intelligence (AI).
New bookings dropped by 3% in the second fiscal quarter to $20.9 billion, with generative AI solutions bringing over $1.4 billion. Even this, the company’s revenue rose by 5% to $16.7 billion during the quarter.
Accenture’s operating margin rose by 50 basis points to 13.5%, while its diluted earnings per share moved to $2.82.
Analysts now expect that Accenture’s revenue will be $17.25 billion in the third fiscal quarter, a 4.7% increase. The upper side of the estimate is $17.56 billion, while the lower side is $16.47 billion. The annual figure is expected to be $68.65 billion, up by 5.79% from the last financial year.
Its annual revenue will then rebound and hit $72.85 billion next year. The annual earnings per share will be $12.73 this year and $13.7 next year.
Read more: Accenture stock price has catalysts after the robust TCS earnings
Accenture stock price technical analysis
The weekly chart shows that the ACN share price has been in a freefall in the past few weeks. It dropped from a high of $397 this year to $300, its lowest level in July last year.
The stock has formed an ascending channel and is now hovering at its lower side. It has moved below the 50-week moving average and the Ichimoku cloud indicator.
Accenture share price has moved to the bottom of the trading range of the Murrey Math Lines (MML). Also, the Relative Strength Index (RSI) and the MACD indicators have pointed downwards.
Therefore, the stock will likely continue falling as seller s target the ultimate support at $250. It will then bounce back later this year as investors buy the dip.
The post Here’s why the Accenture stock price has fallen apart appeared first on Invezz