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UiPath Shares Plummet Despite Earnings Beat; Analysts Cut Price Targets

UiPath shares slumped over 6% in pre-market trading on Wednesday despite the New York City-based software company for robotic process automation reporting better-than-expected earnings in the second quarter and lifting its forecast for its recurring revenue for the ongoing fiscal year.

The company reported quarterly adjusted earnings of 1 cent​​ per share, beating analysts’ expectations for a loss of 5 cents per share. Revenue jumped 60% year-on-year to $195.52 million​, above the Wall Street consensus estimates of $184.34 million.

The company expects revenue to reach $207 million to $209 million in this quarter, above the consensus estimate of $205.8 million. The company expects annualized recurring revenue in the range of $876 million to $881 million this fiscal year, up from the previous forecast of $850 million to $855 million.

Despite this UiPath shares fell 6.39% to $58.47 in pre-market trading on Wednesday. The stock is up over 4% since its debut on the New York Stock Exchange in April with an IPO price of $56.

Analyst Comments

“2Q reflected continued demand strength w/ ARR +60% y/y on robust 144% net retention. PATH upped 2H ARR outlook above consensus and continues to invest aggressively. A high bar of expectations paired w/ rev rec noise in billings & volatile new logo iARR apt to pressure shares. However, sustainability of outsized growth via PATH’s leading position in a massive TAM is attractive, in our view. Price target $80,” noted Bryan C. Bergin, equity analyst at Cowen.

UiPath Stock Price Forecast

Eleven analysts who offered stock ratings for UiPath in the last three months forecast the average price in 12 months of $74.90 with a high forecast of $86.00 and a low forecast of $40.00.

The average price target represents a 19.92% change from the last price of $62.46. From those 11 analysts, four rated “Buy”, six rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $74 with a high of $142 under a bull scenario and $24 under the worst-case scenario. The firm gave an “Equal-weight” rating on the software company’s stock.

“60% YoY ARR growth beat expectations, however, transactional metrics indicated in-quarter growth closer to ~30%. While confusion on the right growth metric may weigh on the stock, we see ARR as the key number. 33% net new ARR growth and 144% DBNRR remain supportive of a durable 30%+ grower,” noted Keith Weiss, equity analyst at Morgan Stanley.

“UiPath primarily targets a large $25 bn Workflow Automation market, relieving employees from repetitive, routine tasks that are a part of many digital workflows in enterprises today. A clear category leader in robotic process automation, with a leading market share in one of the fastest-growing software markets, UiPath has expanded its product set through acquisitions to build out an end-to-end automation platform. At the same time, competition has been rapidly rising, from both traditional RPA or BPM vendors as well as enterprise platforms such as Microsoft and ServiceNow. With heighted competitive risks coupled with high multiple, we look for continued execution and leadership.”

Several other analysts have also updated their stock outlook. Canaccord Genuity lowered the target price to $65 from $75. Barclays cut the target price to $70 from $73. Cowen and company slashed the target price to $80 from $84. JPMorgan cut the target price to $64 from $68.

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This article was originally posted on FX Empire

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