Consistent with its strategy to strengthen its Analytics business, Accenture Plc. (ACN) completed the acquisition of change management company Change Track Research Pty Ltd.
With this acquisition, Accenture will have access to Change Track’s key solutions such as ChangeTracking, which is an analytics tool using 10 years of research and advanced math algorithms to track data. We believe that this acquisition is basically intended to strengthen Accenture’s portfolio of analytical tools and capabilities, which will ultimately help clients to identify areas requiring change, monitor the process of change, understand the effects of change in advance and implement them smoothly.
The portfolio diversification strategy has helped Accenture strengthen its offerings and counter the sluggish growth in underperforming regions. Moreover, Change Track being an Australian company will help Accenture build a position in the country.
We believe that Accenture’s acquisition strategy has served the company well in the high-growth emerging markets of India, the Philippines, China and Latin America.
This apart, Europe's weak economic condition is perceived to be an opportunity for some meaningful acquisitions. The company is also eyeing acquisitions in the euro zone at competitive prices, which can reap long-term benefits.
Apart from using acquisitions to expand geographically, the company is also focusing on acquisitions based on utility, wherein the acquiring company obtains access to the technology of the acquired company. This has led to the acquisition of the digital production services vendor avVenta Worldwide. Accenture closed the acquisition without disclosing the terms of the agreement.
Although the acquisition provides much-needed support to the company, the Consulting business would need special attention as its performance could weigh on the overall results, as new consulting projects slowly come over.
Moreover, Accenture is faced with tough competition from companies such as Cognizant Technology Solutions Corp. and International Business Machines Corp. (IBM), a strained spending environment and Accenture’s broad European exposure (roughly 40.0%) may hurt its growth prospects to some extent.
Accenture currently has a Zacks Rank #4 (Sell) primarily due to downward estimate revisions by analysts. However, stocks like CRA International Inc. (CRAI) and Information Services Group Inc. (III), both of which have a Zacks Rank #1 (Strong Buy), are worth considering.
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