EPAM Stock Dives: Other US Stocks Exposed to Ukraine Conflict

By Duncan Ferris

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EPAM Systems has been struggling amid investor concerns over the stock's exposure to Ukraine and Russia. We take a look at the situation and some other US stocks in a similar situation.

EPAM Systems (NYSE: EPAM) has seen its share price plummet, dropping by more than 45% on Monday due to investor concerns over the company’s exposure to Russia and Ukraine.

Stocks from the two nations have of course been impacted hugely, though Russia’s stock market remains closed. The damage to the nation’s publicly traded companies can instead be seen in the impact to Russian ETFs, which have continued to dive on Tuesday. 

But in today’s globalised world, stocks from exchanges across the planet are being heavily affected by the invasion. EPAM is one of these, but far from the only US company which could be hit hard by the Russian invasion.

What is EPAM Systems?

Founded in 1993, this Pennsylvania-based company provides digital platform engineering and software development services in North America, Europe, Asia and Australia. The company is led by its Belorussian CEO, Arkadiy Dobkin, while many of its coders reside in Eastern Europe.

EPAM Systems offers engineering services, infrastructure management services and maintenance and support services. The company also offers operation solutions, optimization solutions and consulting services to help customers expand their software testing capabilities.

EPAM serves the financial services, travel and consumer, software and hi-tech, business information and media, life sciences and healthcare, and other industries. 

Why have EPAM Shares Dropped?

To put it simply, the company’s operations have been threatened by the Russian invasion of Ukraine. Both countries are important geographies for the company. EPAM has 14,000 employees in Ukraine and more in Russia and other neighbouring states.

Russian ally Belarus, which was used as a staging area for the invasion and could get more involved in the conflict, is also key to the company, as well as being the home country of its CEO.  

The company has stated that it is working to help its engineers in Ukraine to reach stable regions or leave the country altogether. However, with violence widespread as Russian forces advance and increasing numbers of Ukrainians signing up to assist their own military, EPAM’s workforce will undoubtedly take a hit.

Even so, EPAM said it is “accelerating hiring across multiple locations in Central and Eastern Europe, Latin America, and India” in order to deal with a sudden reduction in staffing.

Additionally, the company has stressed that its global delivery centers have sufficient resources to support ongoing operations as it continues to operate productively in more than 40 countries.

However, the company last week announced that it had withdrawn its first quarter and 2022 financial outlook, which has clearly shaken investor confidence in the stock.

Other US Stocks with Conflict Exposure

Though it has clearly been hit hard, EPAM is one of many US stocks which has been caused great difficulties by the Russian invasion of Ukraine.

Russian-based companies like Nexters Inc (NASDAQ: GDEV), HeadHunter Group PLC (NASDAQ: HHR), Ozon Holdings PLC (NASDAQ: OZON), Cian PLC (NYSE: CIAN) and Yandex (NASDAQ: YNDX) have seen their trading halted on US exchanges.

Then there are companies which, like EPAM, simply have exposure to the conflict. Here are some other firms to bear in mind: 

  • Mondelez International (NASDAQ: MDLZ): This Chicago-based confectionery, food, holding and beverage and snack food company operates in more than 160 countries and is very big in Russia. The company’s Russian operations accounted for at least 10% of European revenues in its most recent annual earnings, so heavy sanctions could spell trouble.

  • Gentherm Incorporated (NASDAQ: THRM): This thermal management technology developer and marketer has a manufacturing and distribution operation in Ukraine. Last week, the company said its facility in Vynohradiv, which is on the far western corner of Ukraine near the Hungary border, was operating normally. products manufactured at the facility represented approximately 11% of the company’s revenue in 2021.

  • Philip Morris International (NYSE: PM): The cigarette and tobacco manufacturing giant sells its products in around 180 countries, but it has sales exposure of 3% in Ukraine and 10% in Russia. It has also had to suspend operations in Ukraine, where it employed more than 1,300 people and operated a factory in Kharkiv. 

These are just a sample of stocks with exposure to the conflict in Ukraine and as the shocking events continue to unfold there is no telling how many businesses will be affected, let alone how many human lives. 

For the moment, it would likely be prudent to avoid stocks with regional exposure. This rapidly evolving situation could see the conflict expand, while the likes of Russia or Belarus could be hit with further sanctions. You might think this could be an opportunity to pick up some stocks on the cheap, though that could be a dangerous strategy while events remain fluid.

We’ve also produced in-depth reports on ESG investing and Healthcare investing. Or check out our 12 investing themes for 2022.

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Topics:
Systems Software
IT Services
information-technology
Industries:
Information Technology
Companies:
EPAM Systems
Gentherm
Philip Morris International

Author: Duncan Ferris

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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