EPAM
EPAM Systems, Inc.
$88.66
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 52.7% below fair value
You pay
$88.66
Bear
$140.11
Fair
$187.45
Bull
$235.45
Bear
$140.11
+58.0%
7% stage 1 growth, 12% discount
Fair
$187.45
+111.4%
11% stage 1 growth, 12% discount
Bull
$235.45
+165.6%
15% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (11% base case)
Terminal Value % of EV
36%
Implied Market Multiple
7.2x
Market is pricing in (growth)
-3.7%
vs 11.5% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $124.44 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $187.45 per share.
Warnings
Stock-based employee pay equals 47% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $124.44 (from 37 analysts). Our estimate is 72% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions