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On Friday, Mizuho (NYSE:MFG) Securities adjusted its outlook on UiPath Inc. (NYSE:PATH), increasing the price target to $14 from the previous $11, while keeping a Neutral rating on the company’s shares. Currently trading at $12.94, InvestingPro analysis suggests the stock is slightly undervalued. The revision followed UiPath’s first-quarter results, which showed a 6% year-over-year revenue increase, surpassing expectations, and operating margins reaching 20%, well above the consensus.
UiPath, known for its Robotic Process Automation (RPA) solutions, also updated its revenue growth guidance for fiscal year 2026 to 8.5%, a rise from the earlier estimate of approximately 6.8%. The company maintains impressive gross profit margins of 82.6% and a healthy balance sheet with more cash than debt. Despite mixed demand in the public sector, the company is gaining traction, highlighted by a significant contract with the U.S. Air Force.
The analyst noted the early adoption of UiPath’s agentic automation technology, which has seen over 250,000 agent runs, including the first multi-million dollar expansion of its Maestro product. However, management has indicated that they do not expect these developments to contribute materially to revenue within the current year.
Investor sentiment towards the long-term demand for RPA and UiPath’s growth acceleration remains cautious. Still, Mizuho expressed optimism regarding the company’s progress in platform expansion and margin improvement. The new price target of $14 is based on 4 times the next twelve months (NTM) revenue and 14 times NTM free cash flow (FCF), according to the analyst’s comments. For deeper insights into UiPath’s valuation and growth prospects, including exclusive financial health scores and detailed analysis, check out the comprehensive research report available on InvestingPro.
In other recent news, UiPath Inc. reported first-quarter fiscal 2026 earnings that exceeded analyst expectations, with an earnings per share (EPS) of $0.11 compared to the forecast of $0.10. The company also reported revenue of $357 million, surpassing the anticipated $332.83 million. BMO Capital Markets raised its price target for UiPath to $15.50 from $11.50, maintaining a Market Perform rating, following the company’s stronger-than-anticipated deal pipeline and raised guidance for Annual Recurring Revenue (ARR) and revenue for fiscal year 2026. DA Davidson also increased its price target to $14.00, citing UiPath’s successful product launches and significant stock buybacks, while maintaining a Neutral rating due to competitive challenges and softness in net revenue retention.
Evercore ISI increased its price target to $15.00, noting UiPath’s first-quarter performance that surpassed expectations, but maintained an In Line rating until further proof of sustained momentum is evident. Despite surpassing revenue and operating income expectations, Needham retained a Hold rating, pointing to a decline in key metrics like net retention rate and a shortfall in net new ARR. UiPath’s management acknowledged the ongoing variability in the macroeconomic environment but expressed optimism in the company’s momentum, particularly in the public sector. The company achieved a record non-GAAP operating margin of 19.5% for a non-fourth-quarter period, reflecting the impact of streamlining and restructuring efforts. Despite these achievements, the guidance suggests a more challenging second half of the fiscal year, with a significant portion of net new ARR expected to be generated in that period.
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