Best Growth Stock Analysis as of 07 April 2024.
NYSE: EPAM Systems, Inc. (EPAM)
- EPAM Systems, Inc. provides global digital platform engineering and software development services, including requirements analysis, platform customization, migration, implementation, and integration, as well as infrastructure management services such as software development, testing, deployment, maintenance, and support.
- EPAM delivers operational solutions and consulting services spanning various domains, along with digital and service design solutions, covering strategy, creative, and physical product development like AI and robotics.
- The company serves industries such as financial services, travel and consumer, software and hi-tech, business information and media, as well as life sciences and healthcare, among others.
- EPAM Systems, Inc. was founded in 1993 and is headquartered in Newtown, Pennsylvania.
Shareholding Patterns:
| Holder | Shares | Date Reported | % Out | Value |
|---|---|---|---|---|
| Capital Research Global Investors | 7,698,930 | Dec 30, 2023 | 13.31% | 2,035,289,022 |
| Vanguard Group Inc | 6,825,592 | Dec 30, 2023 | 11.80% | 1,804,413,401 |
| Blackrock Inc. | 4,722,634 | Dec 30, 2023 | 8.17% | 1,248,475,455 |
| WCM Investment Management, LLC | 2,502,390 | Dec 30, 2023 | 4.33% | 661,531,783 |
| State Street Corporation | 2,281,830 | Dec 30, 2023 | 3.95% | 603,224,545 |
| FMR, LLC | 2,154,305 | Dec 30, 2023 | 3.73% | 569,512,038 |
| JP Morgan Chase & Company | 1,625,166 | Dec 30, 2023 | 2.81% | 429,628,859 |
| Capital World Investors | 1,574,654 | Dec 30, 2023 | 2.72% | 416,275,508 |
| Invesco Ltd. | 1,437,272 | Dec 30, 2023 | 2.49% | 379,957,204 |
| Geode Capital Management, LLC | 1,274,221 | Dec 30, 2023 | 2.20% | 336,853,044 |
What we think the RISK are:
- EPAM confronts uncertain client demand, highlighted by slowing growth in 2023 and management’s reluctance to specify a recovery timeline, posing revenue and earnings risks.
- Revenue from the Software & Hi-Tech and Business Information & Media segments has experienced the most significant decline for the company.
- EPAM Systems, for instance, faces a significant risk of stagnant or declining revenues.
What we think are PROs of business:
- EPAM is poised to capitalize on rising demand for AI and machine learning services, potentially driving accelerated growth in both revenues and earnings.
- While digitalization offers many benefits to the economy, recent challenges have slowed down digital transformation efforts. However, this slowdown is expected to be temporary and could yield favorable returns for shareholders invested in the sector.
- IT services is one of the fastest growing segments of overall IT spend.
- Warren buffet is also buying this stock from last 2 years.
Fundamentals:
- Market Cap: 15.29 Billion
- Revenue: 4.69 Billion
- 52 Week range: 197.99 – 317.5
- EPS: 7.21
- P/E Ratio: 36.68
Technical Analysis:
- Formation of double bottom technical pattern which is a bullish sign of trend reversal.
- There is also a trendline breakout and price is retesting its levels and will bounce again.
- Its EMA is acting as a resistance level, once it crosses above its EMA it will shoot up towards higher levels.
- Trading at its last breakout level and stock is preparing for bounce.
- RSI is at mid level near 44 and it will turn positive again.
Entry = 263
Stop Loss = 250
Target = 310 / 345 / 450
Our Final Thought:
EPAM maintains a strong position in the sector, benefitting from its solid reputation. Despite current market challenges, industry growth trends indicate persistent demand. However, the current valuation seems to offer limited safety margin. EPAM’s strong reputation gives it a competitive edge in the sector, despite current market challenges. Overall industry trends indicate persistent growth and steady demand. EPAM remains a high-quality founder led business that has hit a rough patch.
The economic cycle poses a significant risk for IT service providers, as their revenues are tied to IT budgets, which, in turn, are influenced by overall economic conditions. A downturn in the economy leading to decreased revenues would impact IT budgets accordingly.
Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and your own due diligence before investing.
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