EPAM Systems: Strong Performance and Increased Guidance Drive Positive Outlook

We raised our fair value estimate for narrow-moat EPAM Systems to $218 per share from $209 after the firm exceeded expectations on both the top and bottom lines in the third quarter and management increased its guidance. The stock had surged 13% in intraday trading as of this writing. We are encouraged by positive catalysts including renewed client reengagement and productivity gains from geographic expansion into Latin America and India. We’ll monitor how well the company replicates its Eastern Europe success in these new regions. After previously viewing the stock as a bit undervalued, given recent strong performance we now view it as fairly valued, even after our fair value estimate increase.