Street Starts Coverage of UiPath (PATH) With Mixed Ratings, Seen as a 'Clear Leader' in the Fast-Growing Workflow Automation Market But Some Say High Growth Already Priced In

May 17, 2021 8:22 AM EDT
Get Alerts PATH Hot Sheet
Price: $54.28 +0.71%

Rating Summary:
    11 Buy, 11 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 7 | Down: 15 | New: 24
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The Street has initiated research coverage of UiPath (NYSE: PATH) stock with mixed views as high sales multiple incorporates bullish outlook for the company.

Analysts mostly agree that the company is a leader in the fast-growing workflow automation market, but the valuation remains tricky.

At least 19 firms have initiated coverage of the stock today with 8 having a “Buy” or equivalent rating on the stock. However, the majority of analysts opted to stay on the sidelines.

One of them is Morgan Stanley analyst Keith Weiss who sees high sales multiples as an issue although PATH has plenty of runway for growth. The analyst started with an ‘Equal-weight’ rating and a $70.00 per share price target.

“On the back of this strong value proposition, UIPath has accrued almost 8,000 customers, an annual recurring revenue (ARR) base of $580 million, with growth of 65% YoY in their most recent fiscal year. Looking forward, with a leading technology platform (see slide 18 in embedded presentation) in a fast growing workflow automation market growing at a 14% CAGR through CY24, UIPath has considerable runway for growth ahead. That said, trading at 36X our CY22revenue estimate, durable growth is already priced into shares at these levels, keeping us on the sidelines,” Weiss wrote in a note sent to clients.

For BofA’s Brad Sills, a compelling ROI driving best in class 145% NRR. The analyst has a “Buy” rating on the stock with a $85.00 per share price target on the stock.

“UiPath screens well in our 4M framework for software investing – Market, competitive Moat, Management strength and Margin potential. The company addresses a large and growing Market, representing an estimated $38bn+ opportunity. With a formidable competitive Moat, stemming from 1) patented computer vision technology that enables rapid development and deployment of attended and unattended bots via process emulation, 2) breadth of technology spanning the entire bot lifecycle from process mining, development, deployment, and management, 3) integration with over 300+ applications and 4) a large installed base of nearly 8,000 customers, we believe that UiPath is well positioned to continue gaining share in the growing RPA market,” Sills says in a memo sent to clients.

“During calls with a number of key customers, feedback suggests compelling time to value and ROI for UiPath deployments. RPA use cases applicable to finance, sales and ops with rapid time to value are driving rapid expansion in existing accounts and best in class NRR, which we believe could be sustainable at 140%+. UiPath recently added a number of key add on modules, which are likely to contribute to incremental NRR via upselling of additional modules (i.e. Orchestrator, Automation Hub, Process Mining).”



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