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On Thursday, Scotiabank (TSX:BNS) analyst Nick Altmann adjusted the price target for UiPath Inc. (NYSE:PATH) shares, reducing it from $15.00 to $12.00. The firm maintained its Sector Perform rating on the stock. Currently trading at $11.83, PATH shares have declined over 51% in the past year. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment. Altmann’s report highlighted that UiPath’s fiscal year 2026 annual recurring revenue (ARR) guidance of 9% fell short of the consensus estimate of 12%. This outlook suggests a year-over-year decrease in net new ARR of approximately 25%, presenting a more cautious stance compared to management’s previous statements about expected stabilization. Despite these challenges, InvestingPro data shows strong fundamentals with an impressive 83.38% gross profit margin and a healthy current ratio of 3.13.
UiPath’s revenue guidance, which forecasts 7% growth, also did not meet the consensus estimate of 11%, impacted partly by a 200 basis point headwind from cloud operations. Management noted an increase in macroeconomic uncertainty in recent weeks, particularly in the public sector. The majority of the ARR impact, as opposed to prior expectations of stabilization, is attributed to these macroeconomic factors.
Scotiabank’s analysis reflects hesitation to place a higher value on UiPath’s stock based on margin upside alone, as medium-term concerns persist regarding the company’s capacity to successfully transition into the artificial intelligence sector. With the forecasted ARR growth now aligned with the company’s guidance at 9% and the net new ARR expected to be more significant in the second half of the year, Scotiabank anticipates that UiPath shares will remain range-bound. Notably, InvestingPro has identified 8 additional key investment tips for PATH, available to subscribers along with comprehensive financial analysis and Fair Value projections in the Pro Research Report.
Altmann’s revised price target of $12.00 is based on the updated growth projections and the current economic environment’s impact on UiPath’s business. The company’s future performance, particularly its ability to navigate the shift towards AI, remains a key factor for investors to monitor.
In other recent news, UiPath Inc. reported its fourth-quarter earnings for fiscal year 2025, revealing an earnings per share (EPS) of $0.26, surpassing the forecasted $0.20. However, the company’s revenue of $424 million slightly missed the $425.27 million forecast. The company also reported a 14% growth in Annual Recurring Revenue (ARR) to $1.666 billion, indicating strong customer retention despite challenges. The fourth-quarter results were affected by delays in the U.S. Federal segment, leading to a conservative guidance for fiscal year 2026. Analysts from Needham maintained a Hold rating on UiPath’s stock, citing uncertainties in the federal market as a concern. Meanwhile, Evercore ISI and Mizuho (NYSE:MFG) Securities both lowered their price targets for UiPath to $12, while maintaining In Line and Neutral ratings, respectively. These adjustments reflect the mixed financial picture and the company’s cautious outlook amidst ongoing public sector scrutiny and broader economic uncertainty. Despite these challenges, UiPath’s growing adoption of cloud services and innovative AI products continues to draw interest from its customer base.
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