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Investing.com -- TD Cowen upgraded EPAM Systems to Buy from Hold and raised its price target to $205, saying the stock is pricing in little credit for the company’s improving revenue momentum and completion of its post-Ukraine delivery restructuring.
The firm noted EPAM has now reported three consecutive quarters of organic revenue acceleration, with growth expected to exceed 6% year-over-year in the third quarter, still below historic levels, but ahead of most large IT services peers.
All six verticals and regions are contributing, and headcount additions are expected to accelerate through the second half of the year.
TD Cowen said the company appears to have moved past the operational disruption caused by Russia’s invasion of Ukraine, which forced EPAM to rebuild its delivery footprint.
With delivery now stable, management has resumed a greater focus on sales execution, client expansion and margin improvement.
The broker believes profitability troughed in 2024 and forecasts margin expansion from 2026 as EPAM optimizes its talent mix and benefits from returning clients who had shifted work to lower-cost rivals in 2022–23.
Cowen models a return to gross margins in the low-30% range and around 13% annual EPS growth from 2026 to 2027.
While sentiment toward IT services stocks remains weak, Cowen sees the risk-reward on EPAM shares as attractive given accelerating organic growth, active capital allocation and a valuation that implies a 2:1 upside-to-downside ratio.
The firm expects revenue growth to reach high-single digits in 2026 as investor confidence rebuilds.