UiPath Inc. (PATH) is a software company that develops and sells robotic process automation (RPA) tools to help organizations automate their operations.
The stock went public in April of last year, and its performance has been erratic since then. UiPath’s stock has dropped over 58% in the last year. However, the blame cannot be laid at the feet of the company’s fundamentals, as the company’s growth story appears to be sound.
The company’s financials for the third quarter were excellent. From an earnings perspective, the company broke even, exceeding forecasts. Furthermore, revenue increased by 50% year-over-year, significantly outperforming analyst expectations. The company’s annual recurring revenue (ARR) increased at a quicker pace of 58%.
From a top-line viewpoint, the results demonstrate robust and, in fact, growing momentum for the company.
Now that PATH is set to release its fourth-quarter financial results for 2022 on March 30, RBC Capital Markets analyst Matthew Hedberg has offered his opinion on the approaching results.
Analyst Expects Strong Q4 Results
Hedberg is optimistic about the company’s fourth-quarter ARR growth and top-line results.
He expects UiPath’s ARR growth, revenues, and earnings per share to be higher than the consensus estimates of $902.5 million, $283.0 million, and $0.03 per share, respectively, for the fourth quarter.
The four-star analyst anticipates a number of positive themes to propel the stock upward, including ” a robust demand environment” and “ongoing labor shortages” are increasing the necessity for automation, among others.
Though the automation market is fragmented and competitive, according to the analyst, UiPath appears to be leading the pack and is “well-positioned as a long-term strategic enterprise automation vendor.”
Hedberg, on the other hand, kept his Neutral rating on the stock and lowered his price target to $37 from $47 per share, citing “peer multiple compression” and the stock’s 40% drop in value since the third-quarter results.
Wall Street’s Take
On TipRanks, UiPath stock commands a Strong Buy consensus rating based on five Buys and one Hold. As for price targets, the average PATH stock price prediction of $56.17 implies about a 95% upside potential from current levels.
Bottom Line
UiPath is a fantastic firm and a market leader in robotic process automation, with a large platform and significant scale. UiPath has a history of delivering excellent top-line growth, and if the company can sustain that strong revenue growth in the future, investors could see strong long-term gains.
For the time being, it will be interesting to see how the company performs in its upcoming earnings season.
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