UiPath Inc.'s stock had a remarkable day on Friday, marking its best performance to date. Wall Street showed overwhelming support for the automation software company following its impressive fiscal-third-quarter results.
Analysts Bullish on UiPath's Approach
Terry Tillman, an analyst at Truist Securities, praised UiPath for its unique combination of GenAI and specialized AI, which he believes positions the company as a leader in automation. Tillman expressed optimism about increased interest in UiPath due to its ability to deliver superior accuracy and faster value for customers. In recognition of these strengths, Tillman upgraded his rating on UiPath's stock (PATH) and raised his price target from $20 to $28.
Impressive Sales Performance
Scott Berg from Needham also shared Tillman's positive sentiments. Berg highlighted the company's focus on platform deals, which has contributed to increased sales productivity. Notably, UiPath recorded a record number of third-quarter transactions with $1 million in annual recurring revenue. As a result, Berg revised his price target for UiPath shares from $20 to $25 and maintained a buy rating.
Record-Breaking Stock Surge
UiPath shares experienced a remarkable surge of 27.1% in Friday trading, positioning the company for its highest single-day percentage gain ever. To surpass the previous record set on March 16, the stock would need to exceed a 17.6% increase.
UiPath Inc. continues to impress investors and analysts alike with its strong financial performance and innovative approach to automation.
Analysis of UiPath's Quarterly Results
Despite its stock nearly doubling in value this year, analysts have contrasting views on whether to recommend UiPath as a potential investment. The company's management, however, has demonstrated strong execution of its repositioning and efficiency improvement strategy. This has resulted in better consistency in the quarterly results, according to Oppenheimer's Brian Schwartz.
On the other hand, JPMorgan's Mark Murphy acknowledges that there is still work to be done, particularly evident in the deceleration of annual recurring revenue growth. Despite this, Murphy and his team recognize UiPath's effective execution and the company's ability to benefit from easier comparisons and relatively stable market conditions. The deceleration of revenue growth is also showing signs of moderating.
UiPath's current stock valuation, trading at approximately six to seven times enterprise value to estimated calendar 2024 revenue, appears to be undervalued in Murphy's assessment. However, he cautions that it could take time for the company to overcome macroeconomic pressures, repositioning efforts, and package offerings that will drive a significant re-acceleration in annual recurring revenue growth.
In conclusion, Murphy maintains a neutral rating on the stock while increasing his price target from $19 to $22.