The Iran war cut $400 million from Accenture’s third-quarter Middle East business, and management trimmed its annual revenue-growth outlook even as it announced three cybersecurity transactions expected to close August or September pending regulatory approvals.
Investorideas.com (www.investorideas.com) a go-to platform for big investing ideas, including technology stocks, covers Accenture (NYSE: ACN) dropping more than 14% intraday, settling near 16% lower by close, after it forecast quarterly sales below Wall Street estimates and said the Iran war cut its third-quarter Middle East business by $400 million.
The miss
Accenture (NYSE: ACN) forecast quarterly sales below Wall Street estimates, said the Iran war hit third-quarter Middle East business by $400 million, and warned of additional fourth-quarter impact, according to Reuters. In the same report, Reuters said the company announced $4.18 billion in industrial-cybersecurity transactions – an agreement to take a majority stake in Dragos and agreements to acquire runZero and NetRise – transactions adding combined annual recurring revenue of $208 million and expected to close August or September pending regulatory approvals – but the market focused on the weaker outlook and sent the stock down more than 14%, settling near 16% lower by close. Reuters said Accenture cut its annual revenue-growth outlook to 3%-4% from 3%-5%.
Punishing a stock more than 14% on the same day it announces $4.18 billion in deals shows investors care far more about the demand outlook than the cybersecurity land-grab.
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Accenture fell because of the outlook, not the deals. Reuters said the company guided quarterly sales below estimates and trimmed its annual revenue-growth range to 3%-4%, and the market focused on that rather than the $4.18 billion cybersecurity package.
The Iran war is a stated, quantified drag on results. Accenture said the conflict reduced third-quarter Middle East business by $400 million and warned of additional fourth-quarter impact.
Accenture’s slide ran against an otherwise risk-on tape, and it was not the only earnings-day name moving the wrong way – Kroger fell on an inflation warning.
Disclosure
All share prices referenced are intraday, captured at the timestamps in the source market data, and are not closing prices. This article is editorial market commentary and interpretation, not investment advice. Price targets, forecasts, and company guidance are attributed to their named sources.
Related coverage: Technology Stocks Directory.
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