UiPath Tumbles 20% on Soft Guidance, Uncertainty Prompts Two Downgrades

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By Senad Karaahmetovic

Shares of Uipath Inc (NYSE:PATH)are down over 20% after the AI company offered lackluster guidance for the third quarter and a full year.

UiPath reported a Q2 loss per share of $0.02, much better than the analyst estimate of a loss per share of $0.11. Revenue for the quarter came in at $242.2 million versus the consensus estimate of $230.64 million.

However, shares were hit by Q3 guidance with PATH seeing revenue in the range of $243 million to $245 million while analysts were looking for $269.6 million in generated sales. On a full-year basis, PATH sees revenue between $1.002 and $1.007 billion, again lower than the consensus of $1.09 billion.

“We delivered a solid second quarter fiscal 2023 despite increasing FX headwinds and macro uncertainty,” the company said in a press release.

However, “solid” results were not enough for a Mizuho analyst to justify the Buy rating as he downgraded shares to Neutral with a $14 per share price target (down from $40).

“While encouraged by the go-to-market (GTM) repositioning to enterprise/C-Suite, we believe the reorganization's focus on delivering profitability, and potential macro deterioration and enterprise-oriented product alignment, will pressure ARR growth. While the guidance de-risks 2H, we expect the shares to remain range-bound near-term until the company makes progress on strategic repositioning,” the analyst told clients in a note.

Similarly, a Morgan Stanley analyst cut the rating to Equal Weight from Overweight with a price target of $15, down from $32.

“Another disappointing print puts PATH firmly in the penalty box. Despite an undemanding valuation, PATH needs to convince investors of the value prop of RPA, competitive positioning within Automation, and ability to execute consistently, a difficult task in a weakening spending environment,” the analyst said in a research note.