Mizuho cuts EPAM Systems stock price target to $267

On Monday, Mizuho (NYSE:MFG) Securities adjusted its outlook on EPAM Systems (NYSE:EPAM) shares, reducing the price target from $282.00 to $267.00, while maintaining an Outperform rating on the stock. The adjustment comes as EPAM’s stock has experienced significant volatility, with a 21.5% decline in the past week alone. According to InvestingPro data, the company maintains strong fundamentals with a GOOD Financial Health score, despite recent market pressures. The adjustment follows EPAM Systems’ announcement of strong fourth-quarter results for 2024 and the release of its initial 2025 guidance, which indicates a return to annual organic constant currency (CC) growth after approximately two years.

The company’s guidance for 2025 forecasts organic CC growth ranging from 1% to 5%, suggesting that EPAM’s demand recovery is progressing as anticipated. However, the projection of a weaker adjusted operating margin implies that 2025 may be a transitional period for EPAM as it integrates acquisitions and invests in anticipation of demand and emerging technologies such as GenAI. The company’s solid financial position, with more cash than debt and a healthy current ratio of 2.96x, provides flexibility for these strategic investments.

Mizuho’s analysis reflects optimism about EPAM Systems’ future performance, citing the company’s successful navigation through a challenging IT Services spending environment over the past two years. The firm also referenced EPAM’s strategic "Great Relocation" of its delivery professionals, which is expected to position the company for accelerated organic revenue growth throughout 2025.

Despite the positive revenue outlook, Mizuho has revised its adjusted earnings per share (EPS) estimates downward due to anticipated lower profitability. The new estimates for 2025 and 2026 incorporate the impact of mergers and acquisitions (M&A) but account for reduced earnings expectations.

The reduction of the price target to $267 from $282 is aligned with the updated financial projections and the anticipation of a transition year for EPAM Systems. Nevertheless, Mizuho reaffirms its Outperform rating, indicating a belief in the company’s capacity to outperform the broader market or its sector in the near future. InvestingPro analysis suggests the stock is currently undervalued, with 11 additional exclusive insights available to subscribers. Get access to the comprehensive Pro Research Report, part of the coverage of 1,400+ top US stocks, for deeper analysis of EPAM’s investment potential.

In other recent news, EPAM Systems reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share of $2.84, surpassing the estimate of $2.75. The company’s revenue for the quarter reached $1.25 billion, beating the consensus estimate of $1.21 billion, and marking a 7.9% increase year-over-year. Despite this strong performance, EPAM’s guidance for the first quarter of 2025 anticipates earnings per share between $2.22 and $2.32, which is below the analyst estimate of $2.59. However, the company projects first-quarter revenue between $1.275 billion and $1.29 billion, exceeding the consensus of $1.267 billion.

Looking ahead to the full year of 2025, EPAM anticipates revenue growth of 10.0% to 14.0%, though its EPS guidance of $10.45 to $10.75 falls short of the analyst consensus of $11.32. Guggenheim maintained its Buy rating on EPAM Systems, despite reducing the price target from $290 to $285, citing positive organic revenue growth as a factor. The firm notes that EPAM’s investments in generative AI are expected to drive future growth, even as they temporarily impact operating margins. These developments underscore EPAM’s strategic efforts to bolster its market position through acquisitions and innovation in AI-related projects.

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