EPAM Systems shares rose 17.5% in the final week of July after Citigroup revised its price target on the stock and the company announced a new artificial-intelligence partnership. The two developments landed within days of each other and left shares trading well below Citigroup's new target.
EPAM Systems shares rose 17.5% from July 24 through the close of yesterday's market session, according to data from S&P Global Market Intelligence. Two separate developments drove the rally: a brokerage price-target revision and a new artificial-intelligence partnership announced the same week.
Citigroup lowers price target to $100
Citigroup lowered its price target on EPAM Systems to $100 from $112 on Monday, while maintaining a neutral rating on the stock. The tempered view seemed negative on the surface, but investors read the reduced target as a glass-half-full signal. Shares had closed at $89.85 before the weekend, implying upside of over 11% from Citigroup's new target.
EPAM joins the OpenAI Partner Network
On Wednesday, EPAM Systems announced it had joined the OpenAI Partner Network as an Advanced Partner. As one of the network's newest members, the company will assist enterprises worldwide in deploying safer, more scalable AI solutions. EPAM Systems projects it will certify more than 5,000 consultants with 10,000+ credentials in the first year of the partnership, part of specialized forward-deployed engineer training the company plans to roll out globally.
Valuation stays below its five-year average
Even after the rally, EPAM Systems remains consistently profitable and generates free cash flow. Shares still trade at 15.2 times trailing earnings, a discount to the company's five-year average price-to-earnings ratio of 18.9.
Source: The Motley Fool
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