On Thursday, Mizuho maintained its Outperform rating on shares of EPAM Systems (NYSE:EPAM) with a steady price target of $245.00. The firm's positive outlook follows EPAM Systems' announcement that it is set to acquire NEORIS, a company specializing in digital transformation and product engineering services.
This strategic move is expected to bolster EPAM's presence in Latin America and contribute to its growth, with NEORIS bringing in a significant revenue increase compared to EPAM's performance in the previous year.
NEORIS, which employs over 4,700 professionals across Latin America, Spain, and the United States, is anticipated to enhance EPAM's geographic service delivery capabilities. The acquisition aligns with EPAM's growth strategy and expands its market reach in key regions. According to Gartner (NYSE:IT), NEORIS experienced a revenue growth of 12% in 2023, a stark contrast to EPAM's 3% decline in the same period.
The revenue generated by NEORIS in 2023 was estimated by Gartner to be around $490 million, which is approximately 10% of EPAM's revenue for that year. The majority of NEORIS's revenue comes from application implementation, which accounts for about 47%, and technology consulting, which makes up about 33%. This acquisition is poised to provide a growth-accretive impact on EPAM's overall financial performance.
EPAM's decision to acquire NEORIS is part of its strategic efforts to strengthen its service offerings and expand its footprint in the technology consulting and application implementation sectors. The company's ability to maintain its Outperform rating and price target amidst this acquisition indicates a positive reception by Mizuho to the potential for growth and expansion facilitated by the deal.
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