UiPath stock price target cut to $11 by DA Davidson

On Thursday, DA Davidson analysts adjusted their outlook on UiPath Inc. (NYSE:PATH), reducing the price target from the previous $15.00 to $11.00, while maintaining a Neutral rating on the stock. This change comes in response to the company’s fourth-quarter fiscal year 2025 results, which have raised new concerns about the company’s future performance. According to InvestingPro data, UiPath, currently valued at $5.55 billion, appears undervalued despite its stock declining over 51% in the past year.

The analysts noted that the results introduced fresh uncertainties, particularly with U.S. Federal customers, which could influence spending decisions in the private sector as well. The guidance for fiscal year 2026 suggests an unusually weak first half, which the analysts believe appears conservative. However, achieving the anticipated 9% Annual Recurring Revenue (ARR) growth for the full year would require a significant rebound in the second half. The company maintains strong fundamentals with an impressive 83.38% gross profit margin and a healthy current ratio of 3.13.

The firm’s analysts elaborated on the challenges facing UiPath by stating, "We are maintaining our NEUTRAL rating on UiPath in response to F4Q25 results which introduced new uncertainties to the business, stemming from U.S. Federal customers but ultimately permeating private sector spending decisions as well." InvestingPro subscribers have access to 10+ additional exclusive insights about UiPath’s financial health and growth prospects.

UiPath’s guidance for the upcoming fiscal year indicates that the company’s performance in the first half of 2026 might not meet expectations. However, the forecasted growth for the full year remains contingent on a strong recovery in the latter half.

The analysts’ statement underscores the cautious stance they are taking due to the potential impact of federal customer-related issues on the broader business, including the private sector. The revised price target reflects these concerns and the anticipated need for UiPath to demonstrate a robust turnaround in the second half of the fiscal year to achieve its growth objectives.

In other recent news, UiPath Inc. reported its fourth-quarter earnings, revealing a 14% growth in Annual Recurring Revenue (ARR) to $1,666 million, slightly missing market expectations. Revenue increased by 5% to $424 million, falling short of the anticipated $426 million. Analysts from firms such as KeyBanc, Scotiabank (TSX:BNS), Needham, Evercore ISI, and Mizuho (NYSE:MFG) have responded with cautious outlooks, reflecting concerns over UiPath’s performance and future guidance. Scotiabank and Evercore ISI both adjusted their price targets for UiPath to $12, citing challenges in the public sector and broader economic uncertainties impacting deal closures.

The company’s fiscal year 2026 revenue guidance forecasts a growth of 6.8% to 7%, below the consensus estimate of 11%, with significant headwinds from cloud operations and foreign exchange fluctuations. Analysts noted UiPath’s strategic focus on artificial intelligence and cloud-based services, with a notable increase in the adoption of its Cloud model. Despite these efforts, concerns remain about the company’s ability to navigate economic challenges and the evolving AI landscape.

Both Scotiabank and Mizuho maintained their respective Sector Perform and Neutral ratings on the stock, while KeyBanc and Needham opted to maintain Sector Weight and Hold ratings, respectively. The company’s future performance, particularly in the public sector and AI adoption, remains a focal point for investors. With UiPath’s management adopting a conservative outlook, the company’s ability to exceed current guidance and successfully integrate AI innovations will be closely monitored.

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