EPAM
EPAM Systems, Inc.
$102.69
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 49.2% below fair value
You pay
$102.69
Bear
$149.12
Fair
$202.13
Bull
$256.53
Bear
$149.12
+45.2%
7% stage 1 growth, 12% discount
Fair
$202.13
+96.8%
12% stage 1 growth, 12% discount
Bull
$256.53
+149.8%
15% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (12% base case)
Terminal Value % of EV
36%
Implied Market Multiple
8.8x
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 $158.00 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $202.13 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 $158.00 (from 37 analysts). Our estimate is 40% 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