HOLT TMT "Idea Generation Playbook for a Market at All Time Highs" Talbott

Research evidence excerpt

HOLT TMT "Idea Generation Playbook for a Market at All Time Highs" Talbott

Quality Laggards

This screen highlights high quality companies (CFROI forecasts of at least 8% and

Quality Peer Rank above 50) that have declined 5% or more year-to-date (though many

by a significantly larger margin). These companies also trade at a discount relative to

their historical valuations. Notably, a large portion of these companies are in the

Software and IT Consulting industries, reflecting market concerns about the long-term

impact of AI on their business models.

Figure 5: Quality Laggards (See here for link to screen in HOLT Lens)

ggards

(See e for link to s Lens)

Qual ity La her creen in HOLT

Source: UBS HOLT Lens. Data as of 5/25/2025. Universe: US, Canada, Europe. Information Technology and Communication Service sectors and Market Cap > $0.5B. Price

Return - Absolute Year to Date < -5, CFROI Used in Valuation > 8, Operational Quality Peer Rank [Region Sector Size Relative] > 50. Valuation Factor Relative to History

[Region Sector] > 50. Table sorted by market cap.

Accenture (ACN)

ACN has consecutively generated CFROI levels above 20% for the last two decades, a

feat only accomplished by 30 companies globally. Near-term consensus forecasts point

to CFROI improving to nearly 45%. Despite improving fundamentals, investor concerns

over disintermediation and margin pressure from emerging AI models have weighed on

sentiment, with shares down ~35% YTD. From a valuation perspective, ACN now trades

at its widest ever discount to the market on an Economic P/E basis, while, on an absolute

basis, the stock has only been cheaper in 2009 during the depths of the financial crisis.

(ACN: Durable Value Creation in HOLT Meets Low Expectations - Kevin McVeigh).