UiPath Inc.’s investor-day presentation disappointed Wall Street, sending stocks down more than 5% in Wednesday trade. Since its initial public offering in April, PATH stock (NYSE:PATH) has dropped over 80%.
Analysts commenting on Wednesday’s previous day’s event expressed concern about UiPath’s (PATH) sales reorganization.
Market Analysis of PATH Stock
Mizuho analyst Siti Panigrahi, who reduced PATH stock (NYSE:PATH) rating to neutral with a price target of $14 in early September, said that the sales restructuring would impact the ARR prediction.
“While we are optimistic about UiPath’s transition to a platform business (which expands the [total addressable market] from $61 billion to $93 billion) and the company’s refined go-to-market motion (which should drive increased traction among enterprise customers), financial guidance for FY24 is weaker than expected and reflects the challenges due to restructuring and a change in [go-to-market strategy] during an uncertain macro environment, while balancing growth and profitability,” P said.
PATH stock (NYSE:PATH) fell as high as 7.3% to an intraday low of $12.46, or 78% below its IPO price of $56 a share in April 2021, and concluded down 3.7% at $12.94. Shares have plunged 70% by 2022, while the S&P 500 index has dropped 22%, and the tech-heavy Nasdaq Composite Index has dropped 29%.
Chief Financial Officer of UiPath, Ashim Gupta, informed analysts during the Tuesday event that while up to 25% year-over-year revenue growth was possible, An anchor projection of 18% growth, or around $1.19 billion in sales, is produced by factoring in anticipated headwinds from software as a service of about 500 basis points and foreign exchange headwinds of about 200 basis points.
According to FactSet statistics, by mid-Wednesday, the Wall Street consensus for revenue had dropped to $1.22 billion, down from $1.24 billion on Monday. In comparison, analysts’ average ARR projection had dropped to $1.41 billion, down from $1.43 billion.
According to JPMorgan analyst Mark Murphy, who has a neutral rating and a price target of $18, investors are concerned about the lower-than-expected ARR prediction as well as the “choppy macroeconomic situation.”
This year, choppiness — or “chopping-ness” — has become the standard for UiPath. Earlier in September, the business reduced its annual sales prediction to between $1 billion and $1.01 billion, with ARR of $1.15 billion to $1.16 billion, down from its earlier expectation of revenue of around $1.09 billion and ARR of $1.22 billion to $1.23 billion.
Eleven of the 22 analysts that cover PATH stock (NYSE:PATH) have a buy rating, ten have a hold recommendation, and one has a sell rating. According to FactSet data, eight analysts reduced their price targets, resulting in an average target price of $18.23, down from a prior $27.98 at the end of August.
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