Incannex Healthcare Halted, News Pending
On Friday, Guggenheim maintained a positive outlook on EPAM Systems (NYSE:EPAM) shares, despite a slight reduction in the price target from $290.00 to $285.00, while reaffirming a Buy rating. Currently trading at $225.07, EPAM has experienced a significant 15.4% decline over the past week. The adjustment follows EPAM’s reported inflection to positive organic revenue growth for the quarter, a sign of the company’s ongoing progress. According to InvestingPro, the company maintains a strong financial health score of 2.97 (Good), with several positive indicators. This growth is attributed to an increase in both the number of program starts and their sizes, with expectations for year-over-year organic growth to persist throughout calendar year 2025.
Guggenheim’s analysis indicates that while the forecast for CY25 adjusted earnings per share (EPS) has been revised downward, this is considered a temporary effect due to softer than anticipated adjusted operating margins. The firm attributes this softness to EPAM’s current investments in anticipation of rising demand related to generative artificial intelligence (AI).
Despite the lowered price target, Guggenheim’s stance is bolstered by EPAM’s trading multiples, which stand at 19 times the estimated EPS for CY26. With a current P/E ratio of 28.54x and according to InvestingPro’s Fair Value analysis, EPAM appears undervalued at current levels. This valuation leads the firm to conclude that the risk/reward profile for EPAM Systems remains favorable. Discover more insights and 6 additional ProTips for EPAM Systems with an InvestingPro subscription, including exclusive access to comprehensive Pro Research Reports covering 1,400+ top stocks.
The analyst’s commentary highlights the company’s strategic investments as a preparatory step for the expected demand surge in generative AI-related projects. These investments are seen as a driver for future growth, outweighing the short-term impact on operating margins.
Guggenheim’s maintained Buy rating reflects confidence in EPAM Systems’ ability to capitalize on market opportunities and navigate the temporary challenges presented by its strategic investments. The firm’s outlook suggests a belief in the company’s potential for sustained growth and value creation for shareholders.
In other recent news, EPAM Systems reported fourth-quarter earnings that exceeded analyst expectations, with significant revenue growth attributed to acquisitions and a return to organic growth. The company posted adjusted earnings per share of $2.84, surpassing the analyst estimate of $2.75, and reported revenue of $1.25 billion, which was above the consensus estimate of $1.21 billion. This revenue figure represents a 7.9% year-over-year increase. For the first quarter of 2025, EPAM anticipates revenue between $1.275 billion and $1.29 billion, exceeding the consensus of $1.267 billion, although its EPS guidance of $2.22-$2.32 falls short of the $2.59 analyst estimate. Looking forward to the full year 2025, EPAM projects revenue growth of 10.0% to 14.0%, with an EPS guidance of $10.45-$10.75, which is below the analyst consensus of $11.32. CEO Arkadiy Dobkin noted the company’s strong fourth-quarter performance and strategic acquisitions of NEORIS and First Derivative, which have enhanced its global delivery capabilities. These acquisitions have helped strengthen EPAM’s position in key markets. The company’s recent developments reflect a strategic focus on expanding its global reach and capabilities.
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