11:42 AM EDT, 06/26/2024 (MT Newswires) -- Accenture ( ACN ) likely faces potential valuation compression from decelerating growth in the cloud business and longer-than-projected time for revenue contribution from generative artificial intelligence, Morgan Stanley said Wednesday.

"[Accenture's ( ACN )] ongoing commitment to invest in Gen AI positions the company at the forefront of innovation, however, we recognize the time needed to scale Gen AI at the enterprise level may take longer-than-expected and a challenged macroeconomic backdrop makes it difficult for Gen AI-based revenue to outweigh cyclical headwinds," the brokerage said in a note to clients.

Earlier this month, the consulting firm announced several leadership changes that Morgan Stanley said are expected to be accompanied by "at least modestly elevated levels of uncertainty," particularly in an ongoing weak and changing demand backdrop.

The brokerage now projects Accenture's ( ACN ) full-year earnings and revenue at $11.96 per share and $64.94 billion, respectively, down from its prior expectations of $12.12 and $65.47 billion, according to the note.

Morgan Stanley also downgraded its rating on the company's stock to equal-weight from overweight and reduced the price target to $300 from $382, saying it no longer sees the stock as "relatively attractive."

Price: 305.42, Change: -1.76, Percent Change: -0.57