Stock of the Day

June 12, 2023

EPAM Systems (EPAM)

$121.37
-$0.89 (-0.7%)
Market Cap: $6.30B

About EPAM Systems

EPAM Systems, Inc. provides digital platform engineering and software development services worldwide. The company offers engineering services, including requirements analysis and platform selection, customization, cross-platform migration, implementation, and integration; infrastructure management services, such as software development, testing, performance tuning, deployment, maintenance, and support services. It also provides operation solutions comprising integrated engineering practices and smart automation services. In addition, the company offers business, experience, technology, data, and technical advisory consulting services; and digital and service design solutions, which comprise strategy, design, creative, and program management services, as well as physical product development, such as artificial intelligence, robotics, and virtual reality. The company serves the financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, and other industries EPAM Systems, Inc. was founded in 1993 and is headquartered in Newtown, Pennsylvania.

Today's Trend

EPAM Systems, Inc. (NYSE: EPAM) shares increased as investors responded to improving earnings expectations and a value-oriented investment case. The stock remains well below its 12-month high, while its valuation and strong balance sheet may be attracting buyers.

  • Analysts raised forward earnings estimates. Zacks Research increased its FY2027 EPS forecast to $11.03 from $10.96 and its FY2028 estimate to $11.90 from $11.82. It also made smaller upward revisions to quarterly forecasts through 2028, suggesting modestly improved expectations for EPAM’s profitability. EPAM Systems FY2026 EPS Estimate Boosted by Zacks Research
  • Value-investing appeal is supporting sentiment. Zacks highlighted EPAM as a strong value stock based on its Style Scores. EPAM’s reported financial profile includes a low debt-to-equity ratio of 0.01, a price-to-earnings ratio of 16.28, and a PEG ratio of 1.19, factors that may appeal to investors seeking relatively inexpensive growth. Here's Why EPAM Is a Strong Value Stock
  • Potential share buyback catalyst. An investment thesis argues that activist investor Engine Capital could push EPAM to use approximately $750 million for share repurchases. At depressed valuation levels, a buyback could reduce the share count and increase per-share earnings, provided management proceeds with the plan. The thesis also notes that AI-native revenue exceeds 11% of EPAM’s business and is growing sequentially. EPAM Systems: AI Is Eating The Old Business, But 8.7x Earnings Is Too Cheap
  • EPAM recently exceeded quarterly EPS expectations, reporting $3.38 versus the $3.16 consensus, although revenue of $1.41 billion was broadly in line with forecasts. Revenue increased 4.6% year over year, indicating improvement but not strong top-line acceleration.
  • AI disruption remains a risk. AI adoption may cannibalize EPAM’s legacy services and create near-term revenue pressure. Flat revenue growth could limit the upside from margin expansion and cost controls if demand for traditional technology consulting weakens.
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