Results: EPAM Systems, Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders in EPAM Systems, Inc. (NYSE:EPAM) had a terrible week, as shares crashed 24% to US$183 in the week since its latest first-quarter results. Revenues were US$1.2b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.97 were also better than expected, beating analyst predictions by 11%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for EPAM Systems

Following last week's earnings report, EPAM Systems' 22 analysts are forecasting 2024 revenues to be US$4.63b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$7.42, roughly flat on the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$4.81b and earnings per share (EPS) of US$7.36 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The average price target was reduced 7.8% to US$273, with the lower revenue forecasts indicating negative sentiment towards EPAM Systems, even though earnings forecasts were unchanged. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on EPAM Systems, with the most bullish analyst valuing it at US$360 and the most bearish at US$195 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.3% by the end of 2024. This indicates a significant reduction from annual growth of 20% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 9.2% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - EPAM Systems is expected to lag the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, earnings are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple EPAM Systems analysts - going out to 2026, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for EPAM Systems that we have uncovered.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.