US IT Services: All Eyes on Outlook

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US IT Services: All Eyes on Outlook

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27 Jul 2026 03:59:20 ET │ 22 pages

US IT Services

All Eyes on Outlook

CITI'S TAKE

Bryan Keane AC

Valuations across the IT Services space have materially come in following +1415-658-4236

instances of slipped bookings, more delayed decision making, and bryan.keane@citi.com

continued pricing pressure due to GenAI, but we believe that 2Q organic

revenue growth should be in-line with guidance for the digital engineering William Tang

focused players EPAM and GLOB. Thematically, discretionary spend has yet +1-212-816-8743

to unlock and AI has yet to drive any noticeable acceleration (mostly william1.tang@citi.com

pressure), with 2H26 outlooks now in focus and investors wondering how

much needs to be cut on the annual guidance. As for the FY26 Y/Y organic Adam Butler, CFA

CC revenue growth guidance ranges, we estimate EPAM to slightly cut to 2- +1-212-816-5181

4% (vs 2.5-5% prior) and for GLOB to slightly cut to -0.7-1.2% (vs 0.3-2.2% adam.butler@citi.com

prior). We remain Neutral on EPAM (reports 8/6), trimming our PT to $100,

and Neutral/HR on GLOB (estimated to report 8/13), trimming our PT to $37, Payments, Processors & IT Services

both due to falling peer multiples.

Short Duration Discretionary Demand Must Overcome Unfavorable Near Term

Operating Environment. Thematically, EPAM and GLOB are both major digital

engineering focused IT services providers that in our view should be approaching

their respective troughs in near term revenue growth rates. Guidance from both

companies suggest a 2H acceleration over 1H performance, but we think that more

evidence of stability will need to surface before valuation multiples can expand to

more normalized levels.

Current Fiscal Year Next Fiscal Year

Short-

Rating Term Target Price EPS EPS