KeyBanc Cautious On EPAM's Future: Downgrades Shares And Trims Revenue Projections

KeyBanc Capital Market analyst Thomas Blakey downgraded shares of EPAM Systems, Inc. EPAM to Sector Weight from Overweight.

The analyst notes that EPAM bears the brunt of pricing headwinds on existing deals and an increasingly competitive market.

The analyst also remains cautious about the company's increased caution in spending from clients, specifically in the "build" segment of its targeted market (which management cited at ~75% of its business).

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The analyst adds that pipeline conversions are lower than previously assumed in addition to some reduction in its pipeline. 

The company's 2Q23 revenue is now expected in the $1.16 billion-$1.17 billion range (vs. prior $1.195 billion-$1.205 billion), reflecting a 2.5% decrease at the midpoint and a 3% decrease from prior guidance at the midpoint. For 2023, topline growth was guided to a decline of 2%.

Based on the above, KeyBanc reduced FY23 revenue guidance from $4.97 billion to $4.68 billion. For FY24, topline estimates have been reduced from $5.66 billion to $4.74 billion.

Price Action: EPAM shares are trading higher by 2.91% to $217.47 on the last check Monday.