Wedbush Morning Call - Jun 15 2026 7:00AM

Research evidence excerpt

Wedbush Morning Call - Jun 15 2026 7:00AM

MORNING CALL - June 15, 2026

Best Ideas List (BIL)/Upgrades/Downgrades/Initiations

EPAM Systems (EPAM)

Rating: NEUTRAL, 12-Month Price Target: $99.00, Price: $95.38

Cautious on Engineering Heritage as Headwinds Cloud the Setup; Initiate NEUTRAL

We are initiating coverage of EPAM Systems with a NEUTRAL rating and $99 price target based on ~7x FY27 P/E multiple

which is a slight discount to peer comps, but we view as appropriate given decelerating organic growth, persistent

North American weakness, and meaningful AI cannibalization risk across the IT Services industry. EPAM's 33-year software

engineering history and early ML adoption give the company credible technical positioning relative to traditional BPO and

consulting peers. We view this as a genuine first-mover asset. What we do not view as genuine is the argument that pedigree

alone insulates EPAM from AI commoditization. Multiple competitors pursue the same opportunity set with similar technical

depth and larger North American sales footprints. Until organic CC growth moves in line with the peer average of ~7%, we

view EPAM's AI positioning as competitive rather than differentiated.

Organic Constant-Currency Growth of 3.7% Illustrates the Underlying Tension in the Story. Total 1Q26 revenue of $1.40B

grew 7.6% y/y, but 3.9 points of that growth was FX tailwind rather than operational execution. Organic CC growth of 3.7% sits

below the broader digital IT services market growth rate and well below what EPAM's AI transformation narrative would imply.

Management lowered both ends of FY26 revenue guidance from 4.5%–7.5% CC on macro deterioration. The gap between