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UiPath Price Targets Are Raised but Analysts Express Valuation Concerns

UiPath gets price target boosts from analysts but shares are lower following the company's quarterly earnings report.
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Analysts raised their price targets for UiPath  (PATH) - Get UiPath Inc. Class A Report after the robotics automation provider reported earnings for the first time as a public company, but some expressed concern about valuation.

Shares of the New York company were down nearly 4% to $73 on Wednesday.

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The company posted adjusted earnings of 2 cents a share, while revenue increased 65% to $186.2 million. Analysts expected a loss of 5 cents a share on revenue of $168.6 million.

Barclays analyst Raimo Lenschow, who raised his price target to $73 from $70 while keeping his equal-weight rating, said UiPath’s first public quarter was strong and deserves some credit.

"However, despite very strong growth at scale," the analyst said in a research note, "expectations seem to have been even higher and shares were down after-market. We see this as another example of inflated expectations creating share price volatility."

Lenschow said that he believes "in the long-term growth opportunity but at 35x (Enterprise value-to-sales) there is simply not much room for short-term upside."

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Canaccord Genuity analyst David Hynes Jr. raised his price target to $75 from $70, while keeping his hold rating.

"We’re confident that UiPath is the category leader in the still emerging (Robotic Process Automation) space, and we believe the firm’s differentiation lies primarily in breadth of platform, experience in scaling customers, and thought leadership in the space," Hines said.

Keith Weiss, an analyst for Morgan Stanley, raised his price target to $72 from $70 and kept an equal-weight rating. He noted that UiPath is building out its automation platform vision, but the company "is still growing into the valuation."

"In the context of a competitive environment that has gotten more crowded over the past year with the entry of Microsoft and ServiceNow into the market," Weiss said, "the pace of innovation at UiPath likely becomes a central area focus and debate for investors going forward."

UiPath made its market debut in April and closed up nearly 24% on its first day of trading. The company had set the estimated price of its IPO at $43 to $50 a share.

UiPath announced its plans to go public in March.

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