Following a 20% decline this year, shares of Accenture PLC (ACN.US) may be positioned for a recovery. UBS believes the recent sell-off has created an attractive entry point, as market fears over artificial intelligence (AI) disruption risks have overshadowed the company's growth prospects. In a report issued on Monday, UBS analyst Kevin McVeigh reaffirmed a "Buy" rating on Accenture and maintained a $320 price target. This implies an upside of approximately 63% from the stock's closing price of $196.73 on Tuesday.

UBS stated that investor concerns that generative AI might bypass IT services firms or compress profit margins appear overstated. Instead, the firm views AI as a productivity-enhancing tool likely to generate additional demand. Accenture recently reorganized its business under a unified "Reinvention Services" model, integrating strategy, consulting, Song, technology, and operations. UBS noted that this structure helps embed AI and data into client solutions more rapidly and supports cross-selling. About 80% of the company's largest deals encompass multiple service lines.

While some software investors worry that AI agents could weaken "per-seat" revenue models, UBS emphasized that roughly 60% of Accenture's current revenue comes from fixed-price contracts, up from 50% in 2023, which may provide some buffer against pricing pressures.

UBS estimates that revenue related to generative AI could contribute 250 to 300 basis points of annual growth for Accenture. Combined with solid expansion in digital transformation, cybersecurity, and digital marketing, UBS forecasts the company's overall revenue to grow at an annual rate of about 6% through 2030. The report also suggested that by 2035, as AI, software, and services converge into outcome-based integrated systems, a $1.5 trillion "services-as-software" opportunity could emerge.

Accenture has established partnerships with major large language model providers, including OpenAI, and makes investments through Accenture Ventures. UBS believes this positions the company advantageously as enterprise AI applications mature.

UBS indicated that Accenture's valuation appears attractive. The stock currently trades at a forward two-year price-to-earnings ratio of about 14 times, its lowest level in over a decade and, for the first time, below that of the S&P 500 index. UBS's $320 price target is based on a P/E multiple of 19.5 times estimated 2028 earnings per share.

Beyond growth prospects, UBS also highlighted Accenture's financial strength, including an adjusted operating margin of approximately 15% and robust cash generation. Management expects to return at least $9.3 billion to shareholders in fiscal 2026, equivalent to over 90% of the median projected free cash flow. UBS stated that the current valuation already reflects concerns about AI disruption but does not fully incorporate Accenture's intellectual property base, alliance network, and historical ability to commercialize new technology cycles.