Artificial intelligence (AI) goes hand in hand with robotics, one representing software to utilize the hardware. The latter makes it much more expensive to develop and cost-effectively scale. Yet, the robotics race is on, merging software and hardware solutions in a single package.
In the long run, introducing robotics in large organizations would eliminate the arbitrary cost of wages, boosting the company’s valuations and productivity. By the decade’s end, the Boston Consulting Group projected a 5% robotics performance annually.
In practice, as the cost of robotic units decreases, this would facilitate the reshoring of labor to higher-wage nations. By 2030, the robotics market, from machine vision and learning to AI and robotics, is expected to reach $103.7 billion at 16.3% CAGR.
For investors, which robotics stocks will participate in this demand the most?
PTC, Inc.
This machine-interfacing facilitator went up 44% over 12 months. Based in Boston, PTC Inc (NASDAQ:PTC) specializes in software solutions for the Internet of Things (IoT), ranging from CAD modeling to product lifecycle management (PLM), training, licensing, and cloud hosting.
At the end of January, PTC delivered its Q1 2024 earnings, delivering 18% year-over-year revenue growth to $550 million. PTC’s annual recurring revenue (ARR) yielded even better at a 24% YoY increase to $2 billion. However, the company incurred more debt, rising by 67% YoY to $2.2 billion, while its free cash flow remained relatively even at $183 million, compared to $172 million in a year-ago quarter.
For fiscal year 2024, PTC expects a $2.42 – $3.32 earnings per share (EPS) range, which represents up to 61% YoY uptick. Relying on recurring revenue streams, the company forecasts significantly increased free cash flow of $725 million from 2023’s $587 million. Investors should note that the latter had previously exceeded guidance of $585 million at a 41% YoY increase.
Based on 18 analyst inputs pulled by Nasdaq, PTC stock is a “strong buy.” The average PTC price target is $202.33 vs current $181. The high estimate is $220, while the low forecast is $177 per share, near the present price level.
Emerson Electric
Based in Ferguson, Missouri, Emerson Electric Company (NYSE:EMR) is a global supplier of automation solutions, specifically for large industrial operations such as gas and oil, manufacturing executions, and dynamic simulation of customers’ needs.
Emerson has been the go-to business optimizer with its software and system applications. In the robotics sector, Emerson is best known for its AVENTICS Series SPRA actuators and PACMotion servo drives used in various industrial uses requiring high precision and load.
In the FY2023 annual report, Emerson increased net sales by 10% YoY to $15.2 billion, with a significantly improved gross profit margin of 49% (up 330 bp). The company’s annual earnings per share increased by 22% to $4.44, while its free cash flow generated the greatest uptick of 35% to $2.4 billion.
For FY2024, Emerson expects a 15.5% net sales increase, with adjusted EPS up to $5.35. Over the last three months, EMR stock went up 20%. Based on 22 analyst inputs pulled by Nasdaq, EMR stock is a “strong buy.”
The average EMR price target is $116 vs the current $106. The high estimate is $130, while the low forecast is $95 per share.
UiPath, Inc.
Since the November coverage, UiPath Inc (NYSE:PATH) is up 40% as one of Cathie Wood’s favored disruptive tech picks. Based in New York City, the company relies on subscription-based licensing for recurrent revenue streams.
UiPath supplies customers with automation solutions by merging robotic process automation (RPA) with artificial intelligence (AI). Although such solutions fit large logistics organizations, including banks and healthcare, the company also serves small to medium-sized businesses (SMB).
UiPath is scheduled to report fiscal January 2024 earnings on March 13th. The latest Q3 FY24 earrings ending October 31st showed a 24% year-over-year revenue increase of $326 million. Likewise, annual recurring revenue (ARR) grew by 24% YoY to $1.378 billion. UiPath’s free cash flow increased by 61% from the year prior to $162.9 million.
Based on 18 analyst inputs pulled by Nasdaq, PATH stock is a “buy.” The average PATH price target is $23.81 vs the current $24. The high estimate is $29, while the low forecast is $17 per share. Given the present price alignment with the average, investors should put PATH stock on a watchlist as a cheaper entry into robotics exposure ahead of the next earnings report.
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Disclaimer: Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
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