Fundamental analysis on UI Path: medium-long term.
Hello everyone,
It's a fundamental analysis, all the way I used some technical analysis tools (see, fibionacci retracement, channels, trend-lines and resistances) because, since not having enough history (the IPO having been in 2021) technical analysis has to give precedence to the fundamental analysis, especially when it's not crypto assets but companies really operating in the markets, and especially among all, the technology one (automation/AI sectors)!
Let's start with fundamental analysis:
UI Path: An explosive growth opportunity?
UI Path (NYSE: PATH), a leader in the robotic automation industry (RPA), may be poised for significant upside. With a market set to grow from $10 billion in 2023 to over $23 billion by 2028 (CAGR of 19%), UI Path is perfectly positioned to ride this wave. Currently, the share price has fallen to $13.06 (as of Oct. 19, 2024), making it a potentially undervalued opportunity.
Strengths:
Continued revenue growth: In 2023, UI Path reported revenues of $1.06 billion, up 19 percent from the previous year. Forecasts indicate revenues of 1.25 billion by 2024, with the possibility of exceeding 1.7 billion by 2026, for an annual growth rate of 15%.
Loyal and expanding customers: With a 130% retention rate, customers not only remain loyal, but also increase their investment in UI Path's platform, signaling trust and steady growth.
Profitability in sight: The company is rapidly improving its operating margins, and is expected to become profitable in the second half of 2025. Gross margins are already at 80 percent, providing a solid foundation for future growth.
Strong liquidity: UI Path has $1.8 billion in cash and minimal debt exposure. This position of strength allows it to invest in innovation and weather any economic shocks.
Propelled by artificial intelligence: UI Path is integrating new capabilities based on artificial intelligence, making its solutions even more powerful and sought-after, especially as digitization increases in every industry.
Potential valuation and upside:
Current price: Currently, the stock trades at $13.06.
Price target: Analysts predict an average target of $22, with an optimistic estimate as high as $27. This represents a potential upside of 68 percent to over 100 percent.
Valuation Multiples: With a current Price/Revenue ratio of about 6.8x, the stock is undervalued relative to the historical average for growth technology stocks. A return to a 10x ratio could bring the stock price to $22-23.
Why get in now?
on the continued expansion of the automation market and UI Path's solid positioning, the current price of $13.06 seems to offer an attractive entry opportunity. If the market recognizes the expected growth and impending profitability of the company, we could see a significant upside of 70-100% in the next 12-18 months.
For UI Path, I would personally tend to be bullish, but with some caution. Here's why:
Bearish aspects (to consider):
Stock valuation: Although currently trading at lower levels than peaks, UI Path remains relatively expensive compared to other tech companies. If it fails to demonstrate profitability on schedule (by the second half of 2025), there could be bearish pressure.
Growing competition: The automation and AI industry is becoming very competitive, with large and small players entering the space. This could put pressure on margins and UI Path's ability to maintain its leadership.
Dependence on macroeconomic environment:A global economic slowdown or reduced technology spending by businesses could negatively affect UI Path's growth, as many companies may postpone implementation of automation solutions.
Technically:
If one wants to trade, one would have to wait for a break of the red channel for bullish confirmation. However, in the past few sessions, we are bouncing off the mm50 daily, which could act as support. However, one has to be careful as nothing prohibits that before going to make the targets indicated by the resistances (orange horizontal lines) it could make further bottoms. If one wants to hold, this entry level is also perfect. I expect in the next 5 years a boom in this stock. Yes, I calling for a pump :D
I would like to remind you that this is not intended to be an incentive to invest, disinvest or stay flat but is only the result of fundamental and technical studies and analysis.
Thanks for your attention and remember this analysis in a few years.
Omar
It's a fundamental analysis, all the way I used some technical analysis tools (see, fibionacci retracement, channels, trend-lines and resistances) because, since not having enough history (the IPO having been in 2021) technical analysis has to give precedence to the fundamental analysis, especially when it's not crypto assets but companies really operating in the markets, and especially among all, the technology one (automation/AI sectors)!
Let's start with fundamental analysis:
UI Path: An explosive growth opportunity?
UI Path (NYSE: PATH), a leader in the robotic automation industry (RPA), may be poised for significant upside. With a market set to grow from $10 billion in 2023 to over $23 billion by 2028 (CAGR of 19%), UI Path is perfectly positioned to ride this wave. Currently, the share price has fallen to $13.06 (as of Oct. 19, 2024), making it a potentially undervalued opportunity.
Strengths:
Continued revenue growth: In 2023, UI Path reported revenues of $1.06 billion, up 19 percent from the previous year. Forecasts indicate revenues of 1.25 billion by 2024, with the possibility of exceeding 1.7 billion by 2026, for an annual growth rate of 15%.
Loyal and expanding customers: With a 130% retention rate, customers not only remain loyal, but also increase their investment in UI Path's platform, signaling trust and steady growth.
Profitability in sight: The company is rapidly improving its operating margins, and is expected to become profitable in the second half of 2025. Gross margins are already at 80 percent, providing a solid foundation for future growth.
Strong liquidity: UI Path has $1.8 billion in cash and minimal debt exposure. This position of strength allows it to invest in innovation and weather any economic shocks.
Propelled by artificial intelligence: UI Path is integrating new capabilities based on artificial intelligence, making its solutions even more powerful and sought-after, especially as digitization increases in every industry.
Potential valuation and upside:
Current price: Currently, the stock trades at $13.06.
Price target: Analysts predict an average target of $22, with an optimistic estimate as high as $27. This represents a potential upside of 68 percent to over 100 percent.
Valuation Multiples: With a current Price/Revenue ratio of about 6.8x, the stock is undervalued relative to the historical average for growth technology stocks. A return to a 10x ratio could bring the stock price to $22-23.
Why get in now?
on the continued expansion of the automation market and UI Path's solid positioning, the current price of $13.06 seems to offer an attractive entry opportunity. If the market recognizes the expected growth and impending profitability of the company, we could see a significant upside of 70-100% in the next 12-18 months.
For UI Path, I would personally tend to be bullish, but with some caution. Here's why:
Bearish aspects (to consider):
Stock valuation: Although currently trading at lower levels than peaks, UI Path remains relatively expensive compared to other tech companies. If it fails to demonstrate profitability on schedule (by the second half of 2025), there could be bearish pressure.
Growing competition: The automation and AI industry is becoming very competitive, with large and small players entering the space. This could put pressure on margins and UI Path's ability to maintain its leadership.
Dependence on macroeconomic environment:A global economic slowdown or reduced technology spending by businesses could negatively affect UI Path's growth, as many companies may postpone implementation of automation solutions.
Technically:
If one wants to trade, one would have to wait for a break of the red channel for bullish confirmation. However, in the past few sessions, we are bouncing off the mm50 daily, which could act as support. However, one has to be careful as nothing prohibits that before going to make the targets indicated by the resistances (orange horizontal lines) it could make further bottoms. If one wants to hold, this entry level is also perfect. I expect in the next 5 years a boom in this stock. Yes, I calling for a pump :D
I would like to remind you that this is not intended to be an incentive to invest, disinvest or stay flat but is only the result of fundamental and technical studies and analysis.
Thanks for your attention and remember this analysis in a few years.
Omar
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.