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EPAM to acquire global tech consultancy NEORIS

Published 04/09/2024, 13:10

EPAM
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NEWTOWN, Pa. - EPAM Systems, Inc. (NYSE: EPAM), a prominent company in digital transformation services, has announced an agreement to acquire NEORIS, a global technology consultancy firm. This strategic move aims to enhance EPAM's delivery capabilities across Latin America and Europe, as well as increase client value in various key industries.

NEORIS, headquartered in Miami, employs over 4,700 professionals and has a strong presence in Latin America, Spain, and the U.S. The consultancy specializes in complex digital projects in sectors including Manufacturing, Banking, CPG & Retail, and Telco & Media. Their expertise spans Digital Experience, Engineering, SAP, Data, Analytics, ML & AI, Interactive UX, Digital Strategy, and Enterprise Architecture.

Arkadiy Dobkin, CEO & President at EPAM, expressed that NEORIS's commitment to engineering quality and innovation, along with their expertise, makes them an ideal partner. The acquisition is expected to solidify EPAM's presence in Latin America and enhance their delivery capabilities in Europe, India, and APAC.

Martin Mendez, CEO of NEORIS, also welcomed the acquisition, anticipating that the partnership with EPAM will allow them to lead in global digital transformation and continue delivering exceptional technology solutions.

NEORIS was founded by Cemex, a global construction materials company, over two decades ago. Cemex's CEO, Fernando Gonzalez, noted the successful history of NEORIS and its contribution to Cemex's pioneering digital technologies. He looks forward to ongoing collaboration with the combined entity, aligning with Cemex's strategy to focus on core businesses.

The acquisition is subject to standard closing conditions, including regulatory clearances, and is expected to be completed in the fourth quarter of 2024. Legal and financial advisors have been appointed for both parties to facilitate the transaction.

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EPAM, established in 1993, has grown to become a leading provider of digital engineering, cloud, and AI-enabled transformation services. The company has been recognized as a top workplace and is known for addressing clients' transformation challenges with a blend of strategy, experience, and technology consulting.

This news is based on a press release statement. For those interested in career opportunities at EPAM, further information can be found on their website.

In other recent news, EPAM Systems faced operational challenges in fiscal years 2022 and 2023 due to geopolitical unrest in Ukraine, affecting about 70% of its delivery capacity. The company is now shifting its delivery footprint toward India, leading to some unique difficulties. Despite these challenges, Deutsche Bank (ETR:DBKGn) initiated coverage on EPAM Systems with a Hold rating and a price target of $204. Similarly, Mizuho Securities lowered its stock price target to $245 from $258 but maintained an Outperform rating. Jefferies upgraded its stock rating from Hold to Buy, raising its price target to $237, while Goldman Sachs (NYSE:GS) initiated coverage with a Neutral rating and a price target of $200.

In terms of mergers, EPAM Systems recently acquired Odysseus Data Services, a move expected to enhance its capacity in the life sciences sector by integrating advanced data analytics and AI. These are some of the recent developments in the company. However, investors should note that EPAM Systems reported a decrease in its 2024 organic CC revenue forecast, following a previous reduction. This led to several firms, including Mizuho Securities, adjusting their outlook on the company. It's important to note that these developments are based on recent analyses and projections from various firms.

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InvestingPro Insights

In light of EPAM Systems' recent announcement to acquire NEORIS, investors and industry experts are closely monitoring the company’s financial health and stock performance. According to InvestingPro data, EPAM Systems currently holds a market capitalization of $11.12 billion, reflecting its significant presence in the digital transformation services sector. The company's P/E ratio stands at 27.67, which adjusts to a slightly lower 23.48 based on the last twelve months as of Q2 2024, indicating a potentially more favorable earnings valuation in the near term.

InvestingPro Tips reveal strategic moves by EPAM's management, such as aggressive share buybacks and maintaining a stronger cash position than debt on its balance sheet. These actions suggest a focus on shareholder value and financial stability, which may reassure investors in the context of the NEORIS acquisition. Furthermore, EPAM's liquid assets surpassing short-term obligations demonstrate the company's ability to meet its immediate financial commitments.

Despite some analysts revising their earnings expectations downwards for the upcoming period, EPAM has been profitable over the last twelve months and is predicted to remain profitable this year. The company's track record of profitability and its high return over the last decade align with its growth narrative and ongoing expansion efforts, such as the NEORIS deal. It is also noteworthy that EPAM does not pay dividends, which could indicate a reinvestment of earnings back into the company to fuel growth and acquisitions.

For readers seeking a deeper dive into EPAM's financial metrics and strategic insights, InvestingPro offers additional tips and real-time data, which can be accessed at https://www.investing.com/pro/EPAM. As of the latest update, there are 8 more InvestingPro Tips available, providing a comprehensive view of EPAM's financial landscape and future prospects.

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This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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