What Happened?
Shares of digital engineering services company EPAM Systems (NYSE:EPAM) jumped 4.8% in the morning session after investment firm TD Cowen upgraded its rating on the stock to Buy from Hold.
The investment firm raised its price target to $205 from $192, citing the software company's "recovering growth trajectory" and the "meaningful completion of its global delivery reorganization." According to TD Cowen, EPAM's accelerating organic growth, a trough in profitability, and a discounted valuation create an attractive risk-reward scenario for investors. The analyst noted that the current share price gives little credit for these positive developments. This upgrade comes as EPAM also announced the expansion of its operations into Azerbaijan, further extending its global reach and focusing on digital initiatives and artificial intelligence solutions in the new region.
After the initial pop the shares cooled down to $165.36, up 4.9% from previous close.
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What Is The Market Telling Us
EPAM’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 4% on the news that stocks continued to rally as investor optimism grew for a potential Federal Reserve interest rate cut in September. This optimism was largely fueled by a recent consumer price index report that showed inflation easing, along with public comments from Treasury Secretary Scott Bessent advocating for a significant 50-basis-point rate cut. The prospect of lower borrowing costs tends to boost rate-sensitive sectors like Business Services, as it can encourage companies to increase spending on consulting, IT projects, and staffing.
EPAM is down 27.8% since the beginning of the year, and at $165.36 per share, it is trading 38.2% below its 52-week high of $267.63 from February 2025. Investors who bought $1,000 worth of EPAM’s shares 5 years ago would now be looking at an investment worth $543.84.
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