UiPath (PATH) Stock Bounces as Citi Sees Opportunity in the Selloff
Key Takeaways
- •Citi initiated coverage of UiPath with a Buy rating and a $23 price target, citing the post-earnings selloff as an attractive entry point.
- •UiPath's fiscal Q2 revenue rose 13% year over year to $410.26 million, beating the $397.8 million analyst estimate, while adjusted EPS of $0.15 met expectations.
- •Bank of America, Truist, TD Cowen, and DA Davidson all raised price targets but kept cautious ratings, awaiting proof that AI accelerates ARR growth.
- •Gross margin declined to 80% from 82% a year earlier.
- •UiPath's investor day on September 22 is expected to detail growth plans and test whether its agentic AI strategy can reaccelerate ARR growth.
Citi delivered a vote of confidence to UiPath (PATH) on Tuesday, initiating coverage of the stock with a Buy rating and a $23 price target. The endorsement follows a difficult stretch for the shares, which fell 16% last week — their steepest weekly decline in more than four months.
The stock edged 0.2% higher in Tuesday's premarket trading. According to Zacks, UiPath currently trades at a premium to its peers, earning a D on the firm's Value Style Score.
Citi analyst Yitchuin Wang argued that the post-earnings selloff creates an attractive entry point. In Wang's view, enterprise AI will require orchestration across agents, models, humans, APIs, and robots, with automation remaining critical for governance and compliance. That framing positions UiPath's core robotic process automation business as a potential beneficiary as enterprises move from experimenting with AI agents to running them in production, where controls and auditability become central concerns.
Wall Street has broadly raised price targets following UiPath's fiscal second-quarter results, but the upgrades come with reservations. The split — a lone Buy alongside a cluster of Holds and an Underperform — reflects the broader debate over how quickly AI spending translates into software revenue, a question weighing on many enterprise application vendors.
Analysts Raise Targets But Want AI Proof
Bank of America analyst Koji Ikeda lifted his price target to $15 from $13 while keeping an Underperform rating. He said the Q2 results did little to answer the key question of whether AI will actually accelerate annual recurring revenue growth. BofA did adjust its model to reflect stronger margin expectations.
Truist raised its target to $17 from $12, maintaining a neutral Hold rating. The firm sees more agentic AI deals and some improvement in customer growth, but says it needs to see faster growth before turning more positive.
TD Cowen raised its target to $16 from $13, also keeping a Hold rating. It flagged steady Q2 performance, stable customer retention, and growing AI adoption as positives.
DA Davidson's Lucky Schreiner raised his target to $16 from $12, staying at Neutral. He noted that UiPath beat ARR expectations and modestly lifted its fiscal 2027 ARR outlook.
Q2 Results Beat on Revenue
UiPath's fiscal second-quarter revenue came in at $410.26 million, up 13% year over year and above the $397.8 million analyst estimate. Adjusted EPS was $0.15, in line with expectations. Gross margin slipped to 80% from 82% a year earlier.
On the earnings estimate front, UiPath is expected to post $0.19 per share for the current quarter, an increase of 18.8% year over year. The current fiscal year consensus sits at $0.80 per share, up 11.1%.
Zacks rates PATH a #2 (Buy), pointing to steady earnings estimate trends despite the valuation premium.
Revenue estimates for the current quarter stand at $444.34 million, implying 8.1% year-over-year growth.
UiPath's investor day is scheduled for September 22, where management is expected to lay out plans to drive higher growth. That event is likely to be the next test of whether the company can convince skeptics — including the Hold-rated analysts above — that its agentic AI strategy can reaccelerate ARR growth.
Source: CoinCentral
