On Friday, Canaccord Genuity (TSX:CF) adjusted its price target for shares of UiPath Inc. (NYSE:PATH), decreasing it to $19 from the previous $30, while maintaining a Buy rating on the stock. The revision reflects a valuation of approximately 26 times the expected calendar year 2025 free cash flow (FCF).
The firm's decision comes in the wake of UiPath's reduced guidance and ongoing organizational changes. Despite these challenges, Canaccord Genuity believes that UiPath's shares remain attractive when compared to its software industry peers.
After the market closed on Thursday, UiPath's stock was trading near $13, which Canaccord Genuity notes could suggest a valuation as low as 16 times the estimated calendar year 2025 FCF.
Canaccord Genuity has expressed disappointment with UiPath's recent quarterly performance but considers the stock to be oversold. The firm's analysis suggests that UiPath could be categorized as a Rule of 30 or possibly even a Rule of 35 business, indicating a strong balance between growth and profitability.
UiPath, a leading company in the robotic process automation market, is navigating through a period of transition, which has impacted its financial outlook. Nevertheless, the firm's maintained Buy rating indicates a belief in the company's long-term potential despite short-term headwinds.
The new stock price target of $19 represents Canaccord Genuity's adjusted expectation for UiPath's future performance, taking into account the recent developments and market conditions. The firm has not provided any further commentary on the potential implications of this price target change for UiPath or the broader software industry.
InvestingPro Insights
As UiPath Inc. (NYSE:PATH) faces a period of transition and market recalibration, insights from InvestingPro provide additional context to Canaccord Genuity's adjusted price target. With a market capitalization of $6.91 billion, UiPath is navigating through its challenges with a notable gross profit margin of 84.73% over the last twelve months as of Q1 2025. This impressive margin underpins the company's strong position in the robotic process automation market, despite its lack of profitability during the same period.
InvestingPro Tips highlight that UiPath holds more cash than debt on its balance sheet and boasts liquid assets that exceed short-term obligations, suggesting financial stability. Furthermore, analysts anticipate net income growth this year, which could signal a turnaround in profitability.
The stock's recent performance, however, has seen significant declines, trading near its 52-week low and experiencing a steep price drop over the past week, month, and three months. This could be an indicator of the oversold territory, as suggested by a Relative Strength Index (RSI) analysis.
For investors looking for a comprehensive analysis, there are additional InvestingPro Tips available, offering deeper insights into UiPath's financial health and market position. Utilizing the coupon code PRONEWS24 will grant an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to these valuable tips and data points that could help inform investment decisions during these volatile times.
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