Mizuho raises UiPath stock target to $25 on strong FQ4 results

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Mizuho raises UiPath stock target to $25 on strong FQ4 results
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On Thursday, Mizuho Securities acknowledged UiPath Inc. (NYSE: PATH ) for its robust fourth fiscal quarter performance by increasing the price target to $25 from $22 while sustaining a Neutral rating on the stock. The adjustment reflects a positive view on the company's recent earnings report and its implications for future financial metrics.

UiPath's recent earnings announcement surpassed revenue expectations and marked a significant milestone with its first quarter of GAAP profitability. The company's Annual Recurring Revenue (ARR) also exceeded forecasts, reaching $1.464 billion compared to the consensus estimate of $1.453 billion.

Despite these achievements, UiPath has experienced a reduction in its total customer base, primarily due to churn among smaller clients, even as it strengthens its focus on larger enterprise customers.

Mizuho highlighted several positive developments, including UiPath's strategic wins with key customers, enhanced engagement with Global System Integrators (GSIs), and the potential for growth through artificial intelligence initiatives. These factors contribute to the firm's optimistic outlook on UiPath's enterprise market traction.

The updated price target of $25 is based on a next twelve months (NTM) enterprise value (EV) to revenue multiple of 8x and an EV to free cash flow (FCF) multiple of 41x, which are both calculated on projected higher earnings.

Mizuho's stance remains cautious, indicating a wait-and-see approach regarding UiPath's ability to significantly reaccelerate its growth trajectory. The firm's current rating reflects this position, as it anticipates further evidence of sustained progress before considering a more bullish stance on the stock.

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