Wolfe Research Downgrades EPAM Systems (EPAM) to Peerperform, 'revenue to decelerate beyond what’s in current estimates'

Wolfe Research analyst Darrin Peller downgraded EPAM Systems (NYSE: EPAM) from Outperform to Peerperform.

The analyst comments "In May, we upgraded EPAM to Outperform from a Peer Perform rating given confidence in management’s ability to succesfully execute on its restructuring strategy following the war in Ukraine. In our view, EPAM handled its strategic pivot extremely well and we see a long run-way of continued differentiation in application engineering and broader digital transformation services. However, recent macro-driven headwinds have tempered our enthusiasm for the sector, and we suspect EPAM will see the impact of demand shifts along with others in the industry (albeit off a higher base of growth and higher multiple). In the most recent quarter, management cited deal slippage in specific industries (retail, consumer), as client desire to spend normalizes from elevated levels postpandemic, and we suspect there may be further demand shifts on the horizon. As a result, in conjunction with our downgrade of IT Services as a sector to Market Underweight from Market Weight, we see a reasonable probability of EPAM’s revenue to decelerate beyond what’s in current estimates, and out-year estimates being revised down. As a result, we downgrade shares to Peer Perform pending macro uncertainty despite our view of EPAM as among the best IT Services operators in the industry."

For an analyst ratings summary and ratings history on EPAM Systems click here. For more ratings news on EPAM Systems click here.

Shares of EPAM Systems closed at $335.22 yesterday.

You May Also Be Interested In

• EPAM Systems (EPAM) PT Lowered to $140 at Guggenheim
• Cantor Fitzgerald Reiterates Overweight Rating on Merlin Labs (MRLN)
• New Street Research Upgrades Micron Technology (MU) to Buy