EPAM Systems ( EPAM Quick Quote EPAM - Free Report) has been pursuing acquisitions to tap new markets, diversify and broaden its product portfolio.
Recently, the company acquired PolSource — one of the leading independent consulting services providers of
Salesforce ( CRM Quick Quote CRM - Free Report) in the Americas and Europe. The acquisition is anticipated to enhance EPAM’s application programming interface (API) and microservices capabilities, thereby boosting its technology consulting practices.
Founded in 2005, PolSource is known as a global boutique Salesforce partner, which specializes in offering multi-cloud end-to-end solutions to several industries including manufacturing, automotive, consumer goods, retail, technology, healthcare and life sciences.
Shares of EPAM have soared 14.5% in the year-to-date period, substantially outperforming the Zacks
Computer – IT Services industry’s gain of 9.3%. Rationale Behind PolSource Acquisition
The latest buyout will complement EPAM’s already expanding Salesforce business. Notably, the company had made a similar acquisition of Mulesoft partner Ricston to enhance Salesforce capabilities in September 2020.
Additionally, demand for cloud-based software and applications have been on the rise for the past couple of years. The research firm — Gartner — predicts that the public cloud services market will grow 19% in 2021 and reach $306.9 billion, up from $257.9 billion in 2020.
Exponential growth in the amount of data, complexity of data formats and the need to scale resources at regular intervals compelled several companies to turn to cloud-computing vendors. Therefore, considering the rising need for cloud-based applications and software, we expect EPAM’s investments in this space to propel long-term growth.
With the acquisition of PolSource, EPAM will be better positioned to leverage the latest technology for its clients, provide enhanced performance and strengthen its position in the Software-as-a-Service (SaaS) based applications as well as Salesforce services provider space. The acquisition will also help EPAM strengthen its customer relationships and expand market share by solving business critical issues.
Acquisitions Drive Growth
EPAM has significantly fortified its business base over the past few years, both organically and through strategic acquisitions. Notably, buyouts have been one of the key growth strategies for EPAM.
The company aims to widen its vertical-specific domain know-how, geographic foothold, service portfolio, client base and management skills via acquisitions. Notably, its service capabilities like digital strategy and design plus consulting and test automation have been enhanced with acquisitions.
Apart from these, such integrations are aiding EPAM to stay highly competitive in a rapidly-changing technology and services industry.
In March 2020, EPAM acquired Deltix, which provides software and services for quantitative research in the financial sector. The acquisition enhanced EPAM’s capabilities and offerings in the FinTech space. The acquisition of Ricston strengthens EPAM’s growing consulting and engineering portfolio of API, micro-services management and integration services.
Such consolidations are envisioned to substantially favor the company’s revenue stream.
Zacks Rank & Key Picks
EPAM currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are
Dropbox ( DBX Quick Quote DBX - Free Report) and NVIDIA ( NVDA Quick Quote NVDA - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see . the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
The long-term earnings growth rate for Dropbox and NVIDIA is currently pegged at 40.9% and 12.6%, respectively.
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