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Shares of Accenture to reach $130 in medium term

I remain upbeat about the shares of Accenture, a global management consulting, technology services and outsourcing firm. The company’s financials for its fiscal 2016 second quarter were solid, with both revenues and earnings per share topping consensus estimated and improving notably y-o-y. Besides, the company raised guidance for full fiscal year 2016. Net revenue growth is expected to be in the range of 8-10% in local currency, compared with the previous growth projection of 6-9%. FY2016 adjusted EPS forecast was raised to $5.21-5.32 from $5.09-5.24.

In April, Accenture announced the acquisition of majority control in IMJ Corporation, a Japanese full-service digital agency. IMJ will join the Accenture Interactive platform, a part of the company's digital marketing-services arm, Accenture Digital.

Since the formation of Accenture Interactive in 2009, the company has made significant acquisitions to enhance its digital marketing capabilities, including the acquisition of Reactive Media, an Australian digital services provider, and Brightstep, a Swedish digital content and commerce solution provider. The purchase of IMJ will help Accenture to provide end-to-end digital marketing services, which will bring a deeper and broader set of digital solutions to clients. Furthermore, according to Atsushi Egawa, country managing director at Accenture Japan, “Acquiring a majority stake in IMJ provides us with enhanced capabilities to deliver digital services in this dynamic market.”

Considering the growing demand for digital marketing, I expect Accenture’s investment in digital and marketing capabilities to boost long-term growth.

Accenture plans to post its fiscal 2016 third quarter results on June 23, and I believe that the company will continue to deliver solid growth of revenues and earnings.

I expect Accenture’s shares to continue growth, with medium-term target at $130.