Accenture, Cognizant initiated at Outperform as IT plays pivotal role in enterprise AI journeys: Evercore

Evercore ISI initiated coverage of Accenture (NYSE:ACN) and Cognizant Technology (NASDAQ:CTSH) with Outperform ratings as the investment firm finds IT services playing a key role as enterprises adopt artificial intelligence.

“As enterprises dive further into AI transformation, we see IT services firms playing a pivotal role in navigating customers through their AI journeys, which could create growth tailwinds for services firms akin to how public cloud adoption contributed to industry growth,” said Evercore analysts, led by Amit Daryanani, in a Thursday investor note. “IT Services firms help enterprises address ‘last mile’ challenges related to the deployment of AI including cloud/data infra modernization, and tailoring solutions to each organizations unique needs.”

Evercore assigned Accenture a $330 price target as the company is expected to maintain mid to high single-digit sales growth due to its market leadership. It is also currently trading a discount to its historical average.

The investment firm initiated Cognizant with an Outperform rating and $100 price target.

“In an upside scenario, CTSH can sustain mid to high single-digit organic growth, ~50bps of annual margin expansion, and double-digit EPS/FCF growth over next several years that enable the company towards ~$6.50+ EPS power,” Daryanani said.