Shares of EPAM Systems (EPAM 0.27%), a tech company that provides services like product development and digital platform engineering, were rebounding in March after a sharp sell-off in February in the wake of Russia's invasion of Ukraine. About half of EPAM's employees were located in Ukraine, Belarus, and Russia, making the company particularly vulnerable to the conflict, and management pulled its guidance at the end of February due to the impact. The stock fell nearly 50% in one day when EPAM made the announcement.
However, the stock recovered some of those losses in March as tech stocks started to rebound in the second half of the month and investors were hopeful that there could soon be a resolution to the war.
According to data from S&P Global Market Intelligence, the stock gained 43% during March. As you can see from the chart below, much of the gains came on March 16 when the market rallied after the Federal Reserve raised interest rates.
There was not much company-specific news out on EPAM Systems last month, but the stock continued to be volatile as investors assessed the impact of the war in Ukraine and EPAM's response.
In the Feb. 28 announcement cutting its guidance, the company said that it was actively working to relocate its Ukrainian employees and their families, and it said it was accelerating hiring in areas including Central and Eastern Europe, India, and Latin America.
On March 4, the company followed up that announcement by saying it would discontinue services to customers located in Russia; it pledged $100 million in humanitarian support for its Ukrainian employees and their families, and it said it had ample resources and infrastructure to serve customers.
The stock fell that day in line with a broader sell-off in the market but began recovering the following week, and surged 25% on March 16 as the Nasdaq jumped nearly 4%.
A "risk-on" shift in market sentiment after the Fed raised rates and hopes for a ceasefire in Ukraine helped boost the stock, and it tacked on some more gains through the end of the month.
It's unclear what the full effect of the war will be on EPAM's bottom line, but it's important for investors to understand that its customer base is global. The issue is that its employees were concentrated in the three participant countries in the war.
EPAM appears to be adjusting its operations, and the impact of the war should be mitigated if it drags on. Analysts have cut their estimates, expecting earnings per share to be flat this year.
Despite the tech stock's gains in March, it's still down 58% year to date, meaning the recovery could continue.