UiPath's Latest Restructuring Did Not Surprise Analysts - Read Why

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  • UiPath, Inc PATH announced a restructuring, including laying off 5% of their workforce, or roughly 200 of their 4,200 employees, as of April 30. 
  • PATH saw $15 million of restructuring costs but increased the mid-point of their non-GAAP operating income by $2 million to $15 million for FY23 while leaving other guidance metrics, including ARR, unchanged.
  • Overall, Needham analyst Scott Berg was not surprised. He expected companies of PATH's size to drive better GTM efficiencies as they scale. 
  • He does not believe PATH's expansion rate is a read-through for the rest of his coverage as he thinks this change reflects a company-specific strategy and not a macro change.
  • Needham had a Buy rating on the stock with a price target of $40.
  • RBC Capital analyst Matthew Hedberg saw the restructuring as related to the go-to-market changes underway to simplify the sales process, drive customer expansion and add new logos through digital sales. 
  • He saw the move as related to ongoing changes vs. reactionary or a proactive action related to changes in demand or the environment. 
  • He remained optimistic about the long-term opportunity.
  • RBC had a Sector Perform on the stock with a price target of $22.
  • The market opportunity in terms of global automatable wages is both massive and largely untapped, as per Credit Suisse.
  • UiPath, with the only purpose-built, end-to-end hyper-automation platform, is leading the paradigm shift toward the fully-automated enterprise, as per the firm. 
  • Although most investors understand the potential addressable robotic process automation market (RPA), many are concerned that increasing competition in the RPA market will slow UiPath's growth. 
  • He believes that UiPath's differentiated, end-to-end platform that can scale from individual workers to company-wide initiatives enabling it to drive strong new customer acquisition, robust customer expansion, and attractive unit economics longer than Wall Street appreciates. 
  • Credit Suisse has an Outperform with a price target of $45.
  • Price Action: PATH shares are trading lower by 2.81% at $20.76 on the last check Tuesday.
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