Accenture Plc. (ACN) has been selected by Guardia Civil, the largest police department in Spain. The force is in the process of integrating 12 additional information sources into its existing system of investigation and operation and this is where Accenture’s services are expected to play a key role.
The company has grown its defense and public safety business, as agencies in this segment face regular challenges from other technologically advanced counterparts. Moreover, declining budgets and increase in security requirements are also increasing the needs. So, Accenture plays an exact role in bridging this gap.
Accenture will play a key role in the integration process and would be instrumental in providing technology services and will also help in managing the transfer and integration of data through a robust and secure IT architecture.
Accenture’s comprehensive service offerings have made it one of the key IT service providers. A large product and service base has also placed the company well in. Accenture has regularly won deals from all industrial sectors as well as the federal vertical.
Industry experts are, however, concerned about the growing foreign exchange headwinds that can have a negative impact on its revenue as most of the company’s revenue comes from the international market. Although Accenture’s track record is good, the ongoing difficult economic conditions in Europe could affect Accenture’s revenues going into fiscal 2013.
The macroeconomic uncertainties and lower-than-expected growth can have a dampening effect on the demand for the company’s products. Moreover, the company is seeing a mixed trend in the Americas, although the situation in U.S. is better than Europe.
Moreover, Adobe Systems (ADBE) recently came out with a cautious outlook, based on weaker demand in Europe, as the company has significant demand in the region. Not only in Europe, businesses are affected by slower growth in other parts of the world like Japan, China, India and others. We also remain concerned about the financial services sector in Europe.
Accenture will continue to invest in priority industries (such as Communications) and emerging markets as well as to boost its brand value. Management expects this focus to generate more business in fiscal 2012.
But competitive pressure from IBM Corp. (IBM) and Deloitte Consulting LLP, a strained spending environment and European exposure compel our short-term bearish view on the stock.
Currently, Accenture has a Zacks #3 Rank, implying a short-term Hold rating.
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