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EPAM Gains Over 5% On 3Q Beat, Strong Outlook; Analyst Raises PT

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support@smarteranalyst.com (Ben Mahaney)
·2 min read
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Shares of EPAM Systems rose 5.4% on Thursday after the software engineering and IT consulting services provider reported stronger-than-expected 3Q results and issued upbeat profit and sales guidance for 4Q.

EPAM Systems’ (EPAM) 3Q adjusted EPS of $1.65 increased 18.7% from the year-ago quarter and came ahead of consensus estimates of $1.47. Revenues of $652.2 million grew 10.9% year-over-year and topped Street estimates of $641.6 million.

The company’s CEO Arkadiy Dobkin said that the “solid third quarter performance was the result of an improving demand environment along with the ongoing expansion of the Company's capabilities—enabling us to continue supporting our customers in the execution of their transformation programs."

The company also issued strong outlook for 4Q that exceeded analysts’ expectations. EPAM projects 4Q revenue between $695 million and $705 million, which is higher than Street estimates of $690.5 million. Its adjusted EPS guidance range of $1.63-$1.73 also came ahead of consensus estimates of $1.56. (See EPAM stock analysis on TipRanks).

Following its earnings release, Needham analyst Mayank Tandon raised the stock’s price target to $400 (15.4% upside potential) from $370 and reiterated a Buy rating. In a note to investors, Tandon wrote, “we remain positive on the stock based on EPAM's robust growth trajectory, healthy margin profile, and exposure to the secular trends driving accelerated spending on digital transformation.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 7 Buys. The average price target of $383.29 implies upside potential of about 10.6% to current levels. Shares have advanced 63.4% year-to-date.

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