On Thursday, JPMorgan (NYSE:JPM) made a significant adjustment to its stance on UiPath Inc. (NYSE: NYSE:PATH), elevating the stock from a Neutral to an Overweight rating and increasing the price target to $28 from the previous $22.
The revision reflects the analyst's expectation that the company's Annual Recurring Revenue growth deceleration is transitioning to a more stable growth trend. This outlook is supported by the increasing adoption of GenAI automation projects and continuous margin improvements.
The firm noted its previous cautious approach to UiPath's stock, having avoided it during its decline from the $80 range down to the $20s. This caution was contrary to the broader market's recommendation at the time. However, recent previews of UiPath's financial quarters, including the current fourth fiscal quarter, have been more positive, suggesting an end to the rapid ARR growth deceleration.
UiPath's shares showed little change in after-market trading, which JPMorgan attributes to the market's recognition of seasonally soft first-quarter revenue guidance and the current Remaining Performance Obligations (cRPO) trend.
The analyst does not anticipate a short-term surge in UiPath's share price. Instead, they see the present situation, with shares priced in the low $20s, as an opportunity for investors to accumulate stock.
JPMorgan's upgraded outlook for UiPath is rooted in the belief that the company's business model is reaching a point of stability in growth, which, when coupled with the ramp-up of GenAI automation projects, positions the company favorably for future performance. Despite the subdued immediate reaction in the stock market, the firm's new price target suggests a more optimistic long-term view of UiPath's potential.
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