On Thursday, Mizuho has revised its stock price target for UiPath Inc. (NYSE:PATH), a leading Robotic Process Automation (RPA) software company. The firm has decreased the price target to $14.00 from the previous $25.00, while maintaining a Neutral rating on the shares.
The revision follows UiPath's recent earnings report where the company's first-quarter revenue slightly surpassed consensus estimates, with a 0.6% margin. However, the company's management has substantially reduced its revenue growth forecast for fiscal year 2025, from 19% down to 8%. The adjustment has been attributed to the impact of macroeconomic challenges and execution issues on multi-year contracts.
Mizuho highlighted that the lowered growth guidance, combined with the departure of UiPath's CEO, is likely to hinder the company's recovery trajectory. These developments are expected to amplify investor concerns regarding the demand for RPA amidst the increasing buzz around artificial intelligence technologies.
The firm anticipates that UiPath will encounter a range of challenges in the near term, including those stemming from broader macroeconomic uncertainty as well as internal company execution hurdles. The new stock price target of $14 is based on a valuation that is consistent with UiPath's industry peers, representing 4 times the next twelve months' enterprise value to revenue (EV/rev) and 26 times the next twelve months' enterprise value to free cash flow (EV/FCF).
InvestingPro Insights
According to recent data from InvestingPro, UiPath Inc. (NYSE:PATH) holds a market capitalization of $10.48 billion and has demonstrated a notable gross profit margin of 85.09% over the last twelve months as of Q4 2024. This impressive margin underscores the company's ability to maintain profitability in its core operations, despite the challenges outlined by Mizuho. Furthermore, UiPath's revenue growth of 23.57% during the same period reflects its resilience and potential for scaling, even as it faces macroeconomic and internal execution challenges.
InvestingPro Tips suggest that while UiPath has not been profitable over the past year, analysts are optimistic about the company's prospects, predicting it will turn profitable this year. Moreover, UiPath's balance sheet strength is evident as it holds more cash than debt, which could provide a cushion against the broader macroeconomic uncertainties mentioned.
For readers interested in a deeper analysis, there are additional tips available on InvestingPro's platform for UiPath, which can be accessed with the special coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
These insights and the positive outlook on net income growth may provide a more nuanced perspective for investors considering UiPath's current valuation and future potential. With the stock's price hovering at 65.63% of its 52-week high and an InvestingPro Fair Value estimate of $19.25, there appears to be a potential upside compared to the revised price target set by Mizuho.
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