Analyst slashes Accenture share price target to $350 amid slump in global IT services spending

Accenture is expected to report a decline in revenue later this week as the global professional services firm continues to experience the impact of a slowdown in IT services spending. When the company posts its fiscal third quarter results on Thursday, analysts predict the firm’s earnings per share will be $3.15 for the three months ended May 31—the same EPS it reported for its fiscal Q3 2023 last June, according to S&P Global Market Intelligence.

Meanwhile, Accenture’s revenue is expected to drop slightly to $16.5 billion, from the $16.6 billion it reported last year.

Dan Dolev, a senior analyst in fintech equity research at Mizuho Securities USA, published a June 18 research note that aligned with the consensus EPS and revenue predictions. But Dolev lowered his estimates for Accenture’s calendar year 2025 EPS to $13.41 from his prior expectation of $13.73.

Dolev said in the note that he was valuing Accenture on a 26 times calendar year 2025 estimate, down from 29 times previously, amid slower expected growth and lower valuations across the entire IT services sector. “Consequently, we are lowering our revenue estimates amid slower growth and delayed recovery prospects,” he said.

Accenture specializes in providing IT services and consulting for clients in sectors including finance, software, and health care. It has 9,000 customers, including three-quarters of the Fortune Global 100 and Fortune Global 500. Shares for Accenture are off 26% from the 52-week high of $387.51, and were trading around $285 on Tuesday.

IT services spending surged in 2021 and 2022 as companies were coming out of COVID-19 and transitioning to a more digital environment. But that has since slowed, Dolev said. In March, Accenture’s shares dropped by more than 5% after the company said that its fiscal 2024 revenue would grow in the 1% to 3% range, down from an earlier 2% to 5% prediction. Accenture also warned that its financial services customers had pulled back on spending, Bloomberg reported.

In October, research firm Gartner predicted that global IT services spending in 2024 would grow by 10.4% to $1.5 trillion. In January, Gartner revised its 2024 IT spending prediction to 8.7%, which they bumped up to 9.7% in April, still below its initial estimates.

“If you are an IT services company, you got used to a lot more work, but all of sudden there’s not more work. End markets spending is less than in the past,” Dolev told Fortune. “Banks and large tech companies are spending less. That impacts demand for IT services firms like Accenture.”

Dolev retained his “buy” rating for Accenture but slashed his price target to $350 from $398, according to the note.

This story was originally featured on Fortune.com