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On Monday, Guggenheim analyst Jonathan Lee adjusted the price target for EPAM Systems (NYSE:EPAM), a leading provider of digital platform engineering and software development services, to $210 from the previous target of $285. Currently trading at $158.03, with a "GOOD" overall financial health score according to InvestingPro, the firm maintains a Buy rating on the company’s shares.
Lee’s decision to lower the price target reflects a response to the current economic climate, which has led to a broader market trend of multiple compression. The stock has experienced significant volatility, with a 32.4% decline year-to-date. However, the analyst emphasized a continued positive outlook for EPAM Systems. Lee noted that recent channel conversations revealed an increase in optimism among EPAM’s clients throughout the quarter, even amidst heightened levels of uncertainty in the global market.
The revised price target comes with a recognition of EPAM’s potential for organic revenue growth acceleration in the calendar year 2025. InvestingPro analysis suggests the stock is currently undervalued, with strong fundamentals including a healthy current ratio of 2.96 and more cash than debt on its balance sheet. Lee pointed out that the company’s valuation currently does not demand a high premium, suggesting that the shares are attractively priced for investors.
EPAM Systems has been navigating a complex global environment, yet the company appears to be maintaining a trajectory that could lead to significant growth in the near future. Guggenheim’s analysis indicates confidence in EPAM’s ability to overcome macroeconomic challenges and capitalize on emerging business opportunities.
Investors and market watchers will likely monitor EPAM Systems’ performance closely, particularly in light of Guggenheim’s expectations for the company’s growth and the adjusted but still positive investment outlook.
In other recent news, EPAM Systems reported fourth-quarter earnings that exceeded analyst expectations, with revenue reaching $1.25 billion, surpassing the consensus estimate of $1.21 billion. The company’s adjusted earnings per share for the quarter were $2.84, beating the expected $2.75. Despite this strong performance, EPAM’s guidance for the first quarter of 2025 anticipates revenue between $1.275 billion and $1.29 billion, which is above the consensus of $1.267 billion, but its EPS guidance of $2.22-$2.32 is below the analyst estimate of $2.59. Looking at the full year 2025, EPAM projects revenue growth of 10.0% to 14.0%, with organic constant currency growth of 1.0% to 5.0%, although the EPS guidance of $10.45-$10.75 falls short of the analyst consensus of $11.32.
In analyst updates, Piper Sandler downgraded EPAM Systems from Overweight to Neutral, setting a new price target of $170, due to concerns over a subdued demand environment affecting revenue growth. Meanwhile, Mizuho (NYSE:MFG) Securities reduced its price target from $282 to $267 but maintained an Outperform rating, reflecting optimism about EPAM’s demand recovery. Guggenheim also lowered its price target slightly to $285 while keeping a Buy rating, citing positive organic revenue growth and strategic investments in generative AI. These developments reflect a mixed outlook for EPAM Systems, with analysts acknowledging both challenges and opportunities in the company’s strategic positioning and market environment.
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