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EPAM – Market expectations are for Uniform ROA to reach new peaks, but management may have concerns about pricing, utilization, and Just-BI

June 29, 2021

  • EPAM Systems, Inc. (EPAM:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 66.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about client pricing, employee utilization levels, and their Just-BI acquisition
  • Specifically, management may lack confidence in their ability to continue meeting non-GAAP operating income guidance, sustain revenue improvements, particularly for their Life Science & Healthcare segment, and meet growing demand by scaling talent acquisition Moreover, they may be concerned about the impact of wage inflation on pricing for clients, the potential of their Just-BI acquisition, and benefits of their Google Cloud platform collaboration with Equifax. Furthermore, management may lack confidence in their ability to grow their software and high-technology client base, maintain high employee utilization levels, and successfully execute their digitization programs