UiPath's stock heads for its best day yet as company's AI prowess wins praise

By Emily Bary

Automation-software company's 'differentiated approach' could pay off amid generative-AI frenzy, analyst says

UiPath Inc.'s stock on Friday was easily cruising toward its best day on record, as Wall Street cheered the automation-software company in the wake of an earnings beat.

"We believe UiPath is an automation leader & should benefit from notable [generative-AI] interest owing to its differentiated approach of combining GenAI with specialized AI, ultimately driving better accuracy & quicker time to value for customers," wrote Truist Securities analyst Terry Tillman in the wake of the automation platform's upbeat fiscal-third-quarter results.

Tillman has a buy rating on UiPath's stock (PATH), and he boosted his price target to $28 from $20 in his latest report.

UiPath shares were up 27.1% in Friday trading and on track to log their best single-day percentage gain on record, which requires besting the 17.6% increase seen March 16.

Needham's Scott Berg also liked what he saw.

"While customer metrics were stable, the company's recent emphasis on platform deals appears to be benefiting sales productivity including a record number of [third-quarter $1 million annual recurring revenue] transactions in the quarter," he wrote, as he raised his price target to $25 from $20 on UiPath shares and stuck with a buy rating.

Others saw positives in the results, though they weren't yet ready to recommend the stock, which has nearly doubled on the year.

"In our view, management is executing well on its repositioning and improving efficiency strategy, and the business is delivering better consistency in the quarterly results," Oppenheimer's Brian Schwartz wrote, while keeping a perform rating on the shares due to their valuation.

JPMorgan's Mark Murphy said that "there is still work to be done, most evident in continued [annual recurring revenue] growth deceleration," though he and his team "think that UiPath is executing well, benefiting from easier comps and relatively more stable conditions compared to the last several quarters, and ARR growth-deceleration is moderating."

At the same time, he wrote that UiPath's stock, trading at about six to seven times enterprise value to estimated calendar 2024 revenue as of the writing of his note, looks "somewhat washed out." That's as "it could take some time to work through the macro pressures, repositioning and repackaging to drive a meaningful re-acceleration in ARR growth."

He rates the stock at neutral, while lifting his price target to $22 from $19.

-Emily Bary

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12-01-23 1457ET

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