UBS starts UiPath with 'sell’ on competitive challenges

Investing.com -- UBS initiated coverage on UiPath Inc (NYSE: PATH) with a "sell" rating, citing mounting competitive pressures and a challenging market environment that could weigh on growth.

UiPath, a leader in robotic process automation (RPA), faces increasing competition from tech giants like Microsoft (NASDAQ: MSFT) and ServiceNow (NYSE: NOW), which embed automation features into broader software suites. UBS also highlighted rising pressure from AI startups and large language model providers, which could dilute UiPath's edge in automation.

Customer growth has stalled since late 2022, following the launch of ChatGPT. UBS noted no clear signs of improvement in net retention rates or execution gains from recent organizational restructuring. Experts interviewed by the firm expressed skepticism about the RPA market’s growth potential.

UBS expects UiPath’s annual recurring revenue (ARR) growth to fall below market expectations through 2026, with further downside risks possible. Brokerage doubts on UiPath's ability to secure new enterprise customers in a market favoring consolidated vendor solutions.

UBS views company's structural and market challenges justify a $14 price target, significantly below its current trading range.

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