On Wednesday, Piper Sandler analyst firm adjusted its stance on EPAM Systems (NYSE:EPAM), downgrading the stock from Overweight to Neutral and setting a new price target of $170.00. The change reflects concerns over the subdued demand environment and its potential impact on the company’s revenue growth. The stock, currently trading at $151.55, has declined about 35% year-to-date, though InvestingPro data shows the company maintains a GOOD overall financial health score.
EPAM Systems, which had previously set its FY25 revenue growth targets between 10% and 14%, with organic revenue growth forecasted at 0.9% to 4.9%, may face challenges in reaching these goals. The initial guidance, provided in February, hinged on an anticipated improvement in the second half of 2025. However, Piper Sandler now expresses skepticism regarding this improvement due to a slowdown in decision-making processes. According to InvestingPro analysis, the company’s current Fair Value suggests it’s trading below its intrinsic worth, with analyst targets ranging from $180 to $300.
The firm anticipates that EPAM’s revenue guidance could be revised downward by 300 to 600 basis points, as the likelihood of a second-half rebound seems uncertain. This potential decline in revenue guidance is a significant factor in the stock’s rating downgrade.
Piper Sandler suggests that the present environment poses a difficult period for growth for EPAM Systems. In light of this, the firm indicates a preference for other companies in the sector, such as Accenture (NYSE:ACN), which is perceived to offer a greater level of stability, or Globant, which is expected to have relatively higher growth.
This rating adjustment by Piper Sandler is a notable development for investors and market watchers, as it may influence the market’s view of EPAM Systems’ stock performance in the near term.
In other recent news, EPAM Systems reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share at $2.84, surpassing the forecast of $2.75. Revenue for the quarter reached $1.25 billion, beating the consensus estimate of $1.21 billion and marking a 7.9% year-over-year increase. For the first quarter of 2025, EPAM anticipates revenue between $1.275 billion and $1.29 billion, which is above the consensus of $1.267 billion, although the projected earnings per share of $2.22-$2.32 fall short of the $2.59 analyst estimate. The company forecasts full-year 2025 revenue growth of 10.0% to 14.0%, with organic constant currency growth between 1.0% and 5.0%, but its EPS guidance of $10.45-$10.75 is below the analyst consensus of $11.32.
Mizuho Securities adjusted its price target for EPAM Systems from $282.00 to $267.00, maintaining an Outperform rating. This adjustment comes as the company shows signs of demand recovery and plans for strategic investments in emerging technologies such as generative AI. Guggenheim also reduced its price target slightly from $290.00 to $285.00, while reaffirming a Buy rating, citing positive organic revenue growth and strategic investments. Both firms noted that while the company is experiencing softer-than-expected operating margins, these are seen as temporary due to ongoing investments. These developments reflect confidence in EPAM Systems’ ability to navigate current challenges and capitalize on future opportunities.
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