EPAM
EPAM Systems, Inc.
$136.25
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 20.2% below fair value
You pay
$136.25
Bear
$141.61
Fair
$170.78
Bull
$197.63
Bear
$141.61
+3.9%
5% stage 1 growth, 12% discount
Fair
$170.78
+25.3%
8% stage 1 growth, 12% discount
Bull
$197.63
+45.1%
10% stage 1 growth, 12% discount
Adjust Assumptions
7.7%
12.0%
3.0%
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
33%
Implied Market Multiple
12.2x
Market is pricing in (growth)
4.0%
vs 7.7% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (37 analysts)
$119.00
Divergence from AlphaVal
44%
Summary
Using a two-stage FCF DCF with 8% growth decelerating over 15 years, discounted at 12%, the base-case intrinsic value is $170.78 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 $119.00 (from 37 analysts). Our estimate is 44% 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