- Needham analyst Mayank Tandon reiterated a Buy rating on the shares of EPAM Systems, Inc. EPAM, lowering the price target to $275 from $325.
- The analyst lowered the price target after the company slashed its second quarter and full year 2023 financial outlook due to sluggishness in the near-term demand environment.
- Due to ongoing economic uncertainty, clients across most of EPAM's geographies and industry verticals have become increasingly cautious about digital transformation spending, the analyst notes.
- Related: Why EPAM Systems Shares Are Slumping Today
- Given the continued uncertainty in the demand environment, the company sees second-quarter revenues of $1.160 billion-$1.170 billion, compared with prior guidance of $1.195 billion-$1.205 billion.EPAM now expects Q2 non-GAAP EPS of $2.33-$2.40, compared with prior guidance of $2.38-$2.46.
- The analyst notes that clients have tempered spending and pipeline conversions are slowing as economic conditions continue to dampen IT services spending.
- Considering this, on bear case assumptions, Tandon thinks that if there is a prolonged economic downturn, EPAM's growth may remain well below historical levels throughout FY23 and FY24.
- On the positive side, the analyst believes EPAM can return to 20%+ organic revenue growth in mid to late FY24 if economic conditions improve and Global 2000 customers release their IT budgets.
- Overall, the analyst reduced the FY23 EPS estimate from $10.70 to $10.10 and the FY24 EPS estimate from $13.00 to $12.20.
- Price Action: EPAM shares are trading lower by 20.4% to $206.47 on the last check Monday.
EPAMEPAM Systems Inc
$191.360.50%
Edge Rankings
Momentum20.01
Growth59.32
Quality66.47
Value57.87
Price Trend
Short
Medium
Long
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