Accenture Federal Services (AFS), a unit of Accenture Plc. (ACN) recently completed the acquisition of ASM Research, Inc. Accenture had announced the acquisition of ASM Research on Jul 31, 2013. ASM Research, the advanced information solutions and services provider is also a wholly-owned subsidiary of AFS. Financial details of the deal were not disclosed.
The acquisition will help Accenture to expand the services that it provides to the Department of Defense (DoD) and Veterans Affairs (VA).
Moreover, through this acquisition, Accenture will be able to utilize the thirty years of experience ASM Research has in the government vertical, as well as its expertise in healthcare IT, information solution and services, data analytics, cloud computing, human capital management and agile software development.
A recent survey by Accenture conducted among 3,700 Doctors in eight countries (Australia, Canada, England, France, Germany, Singapore, Spain and the United States) indicated a growing demand for healthcare IT.
Among Accenture’s operating segments, Health & Public Service revenues increased 11% in local currency, which reflected significant growth in healthcare segment. Health administration and related health aids were the primary growth drivers. The company reported total net revenue of $7.2 billion (foreign exchange impact was negative 2.5%) in the third quarter of 2013, roughly flat with $7.15 billion reported in the year-ago quarter.
The recent acquisitions have helped Accenture enter different business segments and improve its technological base. The company has also been able to improve its customer base, bookings and performance in the insurance, banking and healthcare sectors. This also reflects strong demand for Accenture’s services, which is in turn favorable for its long-term growth prospects.
However, increasing competition from companies like Cognizant Technology Solutions Corp. (CTSH) and IBM Corp. (IBM), a strained spending environment and exposure to Europe remain concerns.
Currently, Accenture carries a Zacks Rank #4 (Sell). Investors should instead consider other technology stocks such as Arrow Electronics, Inc. (ARW), which has a Zacks Rank #1(Strong Buy).
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