Software developer EPAM rises 17% on joining the S&P 500

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The share price of software development company EPAM Systems rose 17.6% on Wednesday after announcing it would enter the S&P 500 next week.

Investors tracking the performance of the index became forced buyers of EPAM Systems as its stock price soared to $700 per share, a gain of more than 100 points from the close of the day before of $595.03 per share.

As traditional businesses transition their systems to new cloud-based digital services amid the pandemic, EPAM has been busy developing solutions for its customers, driving its shares up 96.87% since the start of the pandemic. ‘year.

Vanishing railroad company

EPAM is expected to replace railroad Kansas City Southern on the S&P 500 before the market opens on Tuesday, December 14.

The spot opens as Canadian Pacific Railway is expected to complete its acquisition of Kansas City Southern in the coming days. Canadian Pacific is valued at $31 billion and will create the first single-line rail network connecting the United States, Mexico and Canada, according to a company press release.

Index funds, exchange-traded funds and mutual funds that track the performance of the S&P 500 should buy shares of EPAM Systems ahead of its inclusion in the index, which tracks the stock price of 500 of the most large cap companies in the United States.

Analyst Perspectives on EPAM

EPAM shares have generally risen this year but have had their ups and downs, trading as low as $314.08 per share and as high as $725.40 per share over the past 52 weeks.

The analyst consensus average price target for EPAM is $649.88 per share with a wide range of $444 to $824 per share, according to MarketBeat. In December, all nine analysts covering the company gave it a Buy rating.

Wedbush analysts Moshe Katri and Ryan Campbell are among the most bullish voices for credit calling for a price target of $800 per share, according to a November report sent to Capital.com.

Widespread demand

Last month, EPAM management said demand remains broad as customers seek to accelerate spending in all things digital, generating multi-year work opportunities across various industries including cloud, insurance and mobile. modern architecture, Wedbush analysts noted.

Specifically, only 25% of work has moved to the cloud and a number of verticals, including insurance, continue to operate on legacy mainframes as savvy employees and customers force companies to restructure their digital architecture.

“This year, EPAM’s growth rates have accelerated to mid-20% to mid-30% from the market growth rate of around 7%,” the analysts said.

Read more: Third Pfizer vaccine (PFE) neutralizes Omicron, study finds

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