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Thursday’s trading session saw UiPath Inc. (NYSE: NYSE:PATH) shares react to the latest analyst commentary following the company’s fourth-quarter earnings report. According to InvestingPro data, the stock appears undervalued despite recent challenges, with analyst targets ranging from $11 to $18. Needham analysts maintained a Hold rating on the robotic process automation company’s stock. UiPath’s fourth-quarter results were marked by underperformance, primarily attributed to delayed deals in its U.S. Federal segment. This delay has also led to conservative initial fiscal year 2026 guidance, falling short of expectations due to the continued uncertainty surrounding the timing of these deals.
UiPath reported total revenues of $423.6 million, slightly missing the $425.3 million projection by Needham analysts. The company maintains impressive gross profit margins of 83.4% and has achieved 16.5% year-over-year revenue growth. Foreign exchange fluctuations negatively impacted revenues by approximately $2 million. Adjusting for a similar impact on Annual Recurring Revenue (ARR), the net new ARR of $59 million was around $5 million shy of the company’s guidance. Despite these setbacks, Needham analysts pointed out a silver lining with customers increasingly adopting UiPath’s Agents, reaching 3,000 in usage, signaling strong initial interest in the company’s Agentic innovations.
The report also highlighted a surge in the adoption of UiPath’s Cloud model, with its ARR climbing over 50% year-over-year. Analysts see this uptick as a potential driver for further artificial intelligence adoption, as many of the company’s innovative features are optimized for cloud environments. The expectation is that the current small-scale pilot programs utilizing UiPath’s Agents will significantly expand in the second half of fiscal year 2026.
UiPath’s performance in the cloud sector and the growing interest in its Agentic innovations may offer a glimpse into the company’s future potential. The company maintains strong financial health with a current ratio of 3.13 and holds more cash than debt on its balance sheet. However, the immediate financial figures reflect a period of challenges, with the U.S. Federal segment’s unpredictability casting a shadow over the near-term outlook. As a result, the Hold rating by Needham indicates a cautious approach to the stock amidst the current uncertainties. For deeper insights into UiPath’s financial health and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, UiPath Inc. reported its fourth-quarter earnings for fiscal year 2025, with an earnings per share (EPS) of $0.26, surpassing the forecasted $0.20. However, revenue for the quarter reached $424 million, slightly below the forecast of $425.27 million. The company’s Annual Recurring Revenue (ARR) grew by 14% to $1.666 billion, indicating strong customer retention and growth in subscription-based services. Despite the positive EPS results, UiPath’s stock faced pressure after the earnings announcement, reflecting broader market uncertainties and specific concerns discussed during the earnings call.
Analysts from Evercore ISI and Mizuho (NYSE:MFG) Securities have adjusted their outlook on UiPath, both lowering the price target to $12.00, citing challenges in the public sector and macroeconomic uncertainties. Evercore ISI maintained an In Line rating, while Mizuho kept a Neutral rating on the stock. Both firms noted the company’s push towards artificial intelligence and strategic acquisitions, though long-term demand for robotic process automation remains a concern for investors.
UiPath management has acknowledged delays in the public sector, particularly in the Federal market, as a significant factor affecting revenue. The company has adopted a cautious stance in its guidance for the first quarter and fiscal year 2026, projecting revenue between $1.525 billion and $1.530 billion. Despite these challenges, UiPath continues to focus on innovation, launching new AI products and completing a strategic acquisition to expand its capabilities in the agentic automation space.
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