UiPath (PATH) stock forecast: A bumpy road since IPO
Founded in 2015, UiPath (PATH) automates manual processes using software robots to emulate people. If this sounds complicated, their mission statement makes things simpler: “We make software robots so people don't have to be robots.”
The bulk of UiPath’s revenue comes from software licences and professional services. It has a presence in 31 countries, with major operations in the US, Japan and Romania.
The company’s share price has fallen by over 25% since its market debut in April 2021 on the back of the weak third-quarter earnings.
What factors are shaping the UiPath share price forecast?
UiPath stock analysis: Technical view
UiPath completed its IPO on 23 April 2021, with an initial share price of $56. The stock climbed to an all time high of $85.12 on 24 May 2021, but has fallen steadily since on the back of disappointing earnings. The price is currently sitting at $41.31 (21 December) – a 26% drop from its list price.
The relative strength index (RSI) has fluctuated significantly in the nine months since its IPO, pushing above 70 several times (most recently in November), signalling the price could be set for a decline.
A move in the RSI below 30 signals the asset is being oversold and overvalued. UiPath shares moved below this threshold several times in December, though the current RSI of 34.30 is neutral.
Latest results miss estimates
In the latest UiPath stock news, the company reported third-quarter revenues of $221m, representing 50% year-on-year revenue growth.
The company also announced strong figures for its annualised renewal run rate (ARR) – a measure of its ability to acquire new subscriptions and maintain relationships with existing ones. Q3 saw an ARR of $818m, up 58% on the previous year. UiPath expects revenues of $281m-$283m and ARR of $901m-$903m for the next quarter.
The third-quarter profit missed analyst estimates with a net loss of $122.8m or -$0.23 a share. UiPath’s share price dipped following Q3 results release, falling from $46.98 on 8 December to $44.05 by 10 December – a drop of over 6%.
This downward trend continued. The share price reached a low of $42.32 on 21 December, with multiple analysts, including Well Fargo and Barclays lowering their price targets.
Winning the ‘new space race’?
As the Covid-19 pandemic forced employees to work from home, organisations expedited digital transformation efforts, investing more in automation. But competition from industry giants like Microsoft (MSFT) and emerging players like Blue Prism (PRSM) is fierce.
Investment research company ShadowFall has likened robotic process automation (RPA) to a new ‘space race’, with companies needing to move quickly to secure significant market share.
Their research highlighted that UiPath is ahead of rivals Automation Anywhere and Blue Prism in terms of market share and share of online searches.
Riding the Forrester wave
UiPath is highly rated by global market research company Forrester, ranking it as a leader in the first quarter of 2021, thanks to its strong strategy and current offering.
According to the report, UiPath offers an enterprise-grade and innovative RPA solution augmented by a large ecosystem of partners, making it a good fit for large, global enterprises with demanding needs for support and governance.
Big spenders?
The Annualized Renewal Run-rate is UiPath’s key operating metric. Its business relies on customers renewing annual subscriptions and adding to them as they deploy more robots and adopt more platform products. The figures so far look promising, with the third-quarter ARR of $818m.
Yet the 135 customers with ARR of over $1m made up 41% of revenues, reflecting possible overdependence on larger clients, which may leave the company vulnerable.
“We derive a substantial proportion of our ARR from sales to our top 10% of customers,” the company said in its latest SEC filing.
Future figures
The robotics company has experienced net losses each fiscal year since inception, reporting net losses of $462.5m in the three quarters of 2021.
Though Q4 projections for revenue look bullish, UiPath anticipates that costs and expenses will increase, which could impact profitability.
“In particular, we intend to continue to expend significant funds to further develop our platform, including by introducing new products and functionality, and to expand our inside sales team and enterprise sales force to drive new customer adoption, expand use cases and integrations and support international expansion” said the SEC filing.
UiPath (PATH) stock forecast for 2022
Analysts rate UiPath a consensus ‘hold’, with twelve ‘buy’ ratings, nine ‘hold’ ratings and two ‘sell’ ratings, according to the 23 analyst views collected by MarketBeat.
The average UiPath stock price target currently sits at $67.55 (21 December), ranging from a low of $40 to a high of $85.
Analysts were split in their responses to December’s results release, with Terry Tilman at Truist lowering his UiPath stock price prediction from $82 to $75, but reiterating a ‘buy’ rating.
Michael Turits at KeyCorp and Raimo Lenschow at Barclays also lowered their UiPath price targets, while maintaining an ‘overweight’ rating.
Michael Turrin at Wells Fargo reiterated an ‘equal weight’ rating, and cut his price target from $65 to $50. Analysts at Macquarie also dropped their price target from $71 to $55, reiterating a ‘neutral’ rating for UiPath.
Only Berenberg Bank upgraded UiPath stock, rating it from a ‘hold’ to a ‘buy’, and issuing a $64 price target, a possible 31.4% upside on the report day share price.
Note that analyst predictions can be wrong. Forecasts should not be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
UiPath stock forecast 2025
Wallet Investor’s algorithm-based service gave the stock bearish projections for the next twelve months. According to their UiPath share price forecast, the stock is set to fall consistently, reaching a price of $0.00001 by this time next year.
Wallet Investor’s forecasts use historical price movements to predict future prices. Their models see the UiPath share price falling to $18.45 by June 2022, before declining steadily to $1.72 by October 2022.
According to Wallet Investor, the share price could fall below $0.01 in November 2022, and stay there until January 2024.
Note that algorithm-based predictions can be wrong, and past performance cannot guarantee future results. Forecasts shouldn’t be used as a substitute for your own research. Always consult your own due diligence before investing, and never invest or trade money you can’t afford to lose.
FAQs
Is UiPath stock a good buy?
Analysts rate UiPath a consensus ‘hold’, with twelve ‘buy’ ratings, nine ‘hold’ ratings and two ‘sell’ ratings, according to the 23 analyst views collected by MarketBeat.
Note that analyst predictions are often wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
Why has UiPath stock been going down?
Since its IPO in April 2021, the PATH share price has fallen by 26%. Third-quarter results released on 8 December missed analysts’ expectations. Some analysts have lowered their price targets.
Will UiPath stock go up or down?
According to MarketBeat, analysts’ price targets for UiPath range from $40 to $85. The average analyst price target currently sits at $67.55.
Note that analysts’ predictions are often wrong. Forecasts shouldn’t be used as a substitute for your own research. Always conduct your own due diligence before investing. And never invest or trade money you cannot afford to lose.
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