Accenture stock has rebounded in the past few months, but this trend is losing momentum today. ACN bottomed out at $116.70 shortly after releasing its financial results, and then rebounded to a high of $197.51. This recovery will be put to the test on Thursday when it releases its earnings report.
Options market points to volatility after earnings
Accenture stock has been calm in the past few days, but the options market is pointing to heightened volatility after earnings. Barchart data shows that the implied volatility for options expiring this week has jumped to 103.90%, higher than the historical volatility of 41.25%.
Most of the call volume is concentrated at $180, while put action is about $160. By adding the mid-prices of the ATM $177.50 strike – the call $6.35 and the put $6.85, the ATM straddle cost is about $13.20. Dividing this figure by the current price shows that the market is expecting a 7.45% up or down move by the expiry time.
In terms of volume, it has a put/call ratio of 1.39, suggesting that puts are more than calls. On the other hand, in terms of open interest, it is 0.91. Therefore, there is a likelihood that the stock will drop after earnings.
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Accenture’s business has lost momentum amid AI disruption
The most recent results suggest that Accenture’s business is slowing as companies continue focusing on reinvention during the AI era. Its new bookings came at $19.3 billion, down from $19.7 billion in the same period last year.
Accenture’s revenue rose by $1 billion to $18.7 billion. This slowdown is expected to continue, with analysts expecting that its fourth-quarter revenue will be $18 billion, up by 2.5% from what it made last year. If this is correct, the annual revenue will be $73.5 billion, up by 5.5% from a year earlier.
These numbers come a week after Accenture reached a deal with Anthropic, the creator of Claude. As part of this agreement, Accenture will establish a team of evaluators embedded alongside Anthropic’s team to red-team models, perform alignment assessments, and test safeguards. They will both invest at least $1 billion in the next five years.
The two companies also announced a major partnership last year, allowing over 30,000 employees to be trained on Claude-powered systems.
On the positive side, Accenture has become highly undervalued, with the forward price-to-earnings ratio falling to 12.5, lower than the sector median of 23. It is also lower than the five-year average of 24.
The company is also returning large sums of money to investors, which has reduced the outstanding shares to 611 million from 633 million in 2022.
Accenture stock price technical analysis
ACN stock chart | Source: TradingView
Technicals suggest that the ACN stock price has lost momentum and is on the verge of a reversal. It has formed a small double-top pattern, which is a common bearish reversal sign in technical analysis.
The two lines of the MACD indicator have crossed each other and are pointing downwards. Also, the Relative Strength Index has dropped below the neutral point of 50.
Therefore, the stock will likely remain under pressure and possibly drop to $165 after releasing its earnings report. A move above the resistance at $198 will invalidate the bearish outlook.
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