Accenture Earnings: Firm Pulls Through in Quarter Despite Consulting Weakness; Increasing FVE to $271

Wide-moat Accenture reported a solid EPS beat in the first quarter, while also surpassing revenue FactSet consensus even with consulting revenue remaining muted due to their more discretionary nature. We are increasing our fair value estimate for Accenture to $271 per share from $247 per share, as we are baking in greater growth in outer years of our explicit forecast. While we don't bake in a turnaround in IT services discretionary spending for the remaining fiscal year, we have more confidence that, when such a rebound occurs, Accenture will be able to attract more share of increased demand than we previously baked in. While Accenture already has enviable share of its customers' total IT services spending, which had capped our outer growth rates previously, our increased confidence in revenue levels comes from newer areas the firm is targeting altogether like capital markets.