EPAM Systems Stock Surges Following Jefferies Upgrade to Buy

Epam Systems' stock rises after Jefferies upgrade to Buy on AI boost

The firm also raised the price target to $237 from $202 on the shares of the company, which provides digital platform engineering and software development services. The analysts noted that AI will be a major catalyst. They believe Epam is well-positioned to capitalize on AI, as the company operates on the leading edge of technological change and has a reputation for executing complex systems engineering projects. They also think this subject-matter expertise, and the company's strong engineering talent, will make it one of the top beneficiaries of generative AI, or Gen-AI. The analysts expect Gen-AI to contribute an incremental +500-1,000 bps to annual organic growth for the company three-to-five years from now when AI implementations have overcome the current last mile problem and become more mainstream. However, the analysts are expecting any meaningful revenue boost from Gen-AI until at least the second half of 2025, if not 2026/2027. Jefferies added that it may be early, but there are clear signs that demand for IT Services May be troughing. While it is difficult to predict when demand will return to more normalized levels (Jefferies best estimate assume 2026), it is comfortable in putting in place a thesis that demand is unlikely to meaningfully decline from current levels barring a material negative development in the global economy. This limits downside risk from current levels. Epam Systems (EPAM) has a Sell rating at Seeking Alpha's Quant Rating system, which consistently beats the market. Meanwhile, the Seeking Alpha authors' (2 authors in total) average rating is more positive with a Buy and so is the average Wall Street analysts' rating, Buy.

Jefferies Sees a Bottom for IT Spending -- EPAM Systems Stock Could Get a Boost

EPAM will benefit from artificial intelligence demand and an attractive valuation, Jefferies wrote. Jefferies sees a slowdown in business IT spending bottoming out soon, which could lift shares of EPAM Systems (EPAM). Analysts at Jefferies lifted their rating on EPAM, a provider of software development and digital platform engineering services, to buy from hold, boosting its price target from $202 to $237. Its shares were recently up more than 5%, to around $210. The analysts said business discretionary spending remains "at bay," with only the most vital IT projects, or parts of a project, getting done. But "there is a natural floor to demand for IT services," they wrote, and said and they think the market is near those levels. Along with a recovery in customer demand, Jefferies sees EPAM benefiting from the long-term advantages of demand for artificial intelligence (AI) and cited "an attractive valuation for a high-quality asset." EPAM Systems shares fell to their lowest level since the outbreak of the COVID-19 pandemic last month. While they've risen today, they've lost about 30% of their value this year. Wall Street has a consensus share price target of around $223 on EPAM shares, according to Visible Alpha.