Global consulting firm Accenture (ACN) has warned of significant revenue risks due to budget cuts under the Elon Musk-led Department of Government Efficiency (DOGE). In its post-earnings call, Accenture stated that the DOGE’s cost-cutting measures have led to delays and cancellations of its new contracts, impacting its sales. ACN stock dropped over 7% on Thursday as concerns about reduced government spending and a weak 2025 guidance overshadowed the positive Q2 results.
In context, DOGE is a cost-cutting initiative under Trump’s second term that aims to cut federal spending and downsize the workforce.
Accenture Faces Headwinds
Accenture is among the first to highlight the revenue impact of DOGE’s tightened spending, citing slowed procurement processes.
Moreover, the company stated that the new contracts with the U.S. government have significantly declined since President Trump took office in January. A recent federal filing revealed that an Accenture contract, which could have generated up to $5 million in additional business by 2027, was abruptly terminated. This marks the tenth Accenture contract or subcontract canceled under the Trump administration.
Notably, federal contracts accounted for about 8% of its global revenue and 16% of its revenue in the U.S. in FY24.
Wall Street Analysts Cut Price Targets on ACN Stock
Amid growing uncertainty, Wall Street analysts have lowered their price targets for ACN stock.
Four-star-rated analyst Bryan Bergin at TD Cowen reduced his price target to $365 from $394 while keeping his Buy rating. Bergin acknowledged that federal procurement pressures tied to DOGE are headwinds for the company.
Meanwhile, four-star-rated analyst James Schneider from Goldman Sachs highlighted Accenture’s solid revenue in a tough market. He believes that the post-Q2 stock selloff and FY25 guidance cut seem overdone, and the cautious stance reflects broader macro uncertainty. Schneider lowered his price target from $430 to $415 with a Buy rating.
Is ACN a Good Buy Now?
Overall, Wall Street has a Strong Buy consensus rating on ACN stock based on 12 Buys and four Holds assigned in the last three months. At $393.94, the average Accenture share price target implies about 31% upside potential from current levels.
Year-to-date, ACN stock has declined over 14%.
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