EPAM Systems (NYSE:EPAM) has definitely caught the attention of investors this week following its announcement to open a new innovation hub in Baku, Azerbaijan. The move underscores the company's focus on accelerating digital transformation by expanding into emerging markets. By putting down roots in Azerbaijan and prioritizing AI-native solutions, EPAM is clearly signaling that it wants a front-row seat in the tech-driven future, which might make some investors wonder if this new pivot could be a big growth driver. While the Azerbaijan news has put EPAM back in the spotlight, the stock itself has seen mixed momentum. Year-to-date, EPAM shares are still down, reflecting a drop of around 33%, and over the past year, the stock is off by 25%. Even with a slight uptick over the past month, the longer-term trend remains challenging. This comes after a period of steady revenue and net income growth, with the company making moves to modernize its governance structure, such as increasing its board size and updating bylaws. As EPAM’s expansion ambitions turn heads, the main question is whether the current price reflects a real bargain or if the market is already factoring in these future growth stories. Is now the right time to buy, or is patience the smarter play?

Most Popular Narrative: 27.5% Undervalued

According to the most widely followed narrative, EPAM Systems is seen as significantly undervalued, with analysts suggesting the stock trades well below its estimated fair value based on future growth prospects.

Expanding AI expertise and proprietary platforms are enabling EPAM to secure larger, high-value client engagements and move further up the value chain. Diversification across industries and geographies, coupled with operational efficiencies, is boosting resilience, supporting sustainable growth, and improving margins.

Want to know the story behind this discounted valuation? The secret lies in the ambitious expansion plans and the bold, underlying assumptions fueling future growth. This is essential reading for those interested in what could influence this stock’s next significant move.

Result: Fair Value of $211.12 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising automation and fierce competition could threaten EPAM’s growth if clients shift toward off-the-shelf solutions or if industry giants expand their market share.

Find out about the key risks to this EPAM Systems narrative.

Another View: What Does Our DCF Model Suggest?

Looking through the lens of our discounted cash flow (DCF) model, EPAM also appears attractively valued. This approach weighs future cash flow and investor expectations, so does it confirm the optimism or reveal hidden risks?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day ( check out EPAM Systems for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own EPAM Systems Narrative

If you think this story misses something or you prefer to take a hands-on approach, you can craft your own narrative in just minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding EPAM Systems.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.