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UiPath Shares Decline 41% in a Year: Is Now the Time to Buy?

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UiPath Inc. (PATH - Free Report) has seen its stock drop 41% in the past year, underperforming its industry, which has rallied 21% over the same period. However, the stock has rebounded 8% in the last month, signaling a potential recovery after a steep decline.

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This analysis will examine PATH’s recent performance to determine whether its current valuation presents a compelling buying opportunity for investors.

PATH Thrives in the Automation Market Growth

UiPath remains a strong force in the booming Robotic Process Automation (RPA) market, which is poised for substantial expansion over the coming years. Its end-to-end automation platform positions the company to seize opportunities as demand for AI-driven solutions surges.

A critical driver of PATH’s success is its strategic alliances with top technology giants. Microsoft (MSFT - Free Report) , Amazon’s (AMZN - Free Report) AWS, and Salesforce (CRM - Free Report) continue to play pivotal roles in expanding UiPath’s reach and capabilities. These partnerships with Microsoft, Amazon, and Salesforce not only bolster PATH’s credibility but also integrate its offerings into broader enterprise ecosystems powered by Microsoft Azure, AWS, and Salesforce Cloud solutions.

In the fourth quarter of fiscal 2025, UiPath reported a 5% year-over-year revenue increase to $424 million. Meanwhile, annual recurring revenue climbed to $1.67 billion, up 14% from the prior year, underscoring the effectiveness of its subscription model and strong client loyalty. Through collaboration with innovators like Microsoft, Amazon and Salesforce, PATH is well-positioned to thrive in a competitive and fast-evolving automation landscape.

PATH's Strong Financial Position

PATH boasts a robust financial position, highlighted by its strong balance sheet. As of the fiscal fourth quarter, the company held $1.6 billion in cash and equivalents, with no outstanding debt. This debt-free status ensures that its cash reserves are available to fuel growth initiatives and strategic investments. Such financial flexibility increases PATH’s ability to drive innovation and expand its market presence without financial strain.

Additionally, the company’s liquidity is robust. At the end of the fiscal fourth quarter, PATH reported a current ratio of 2.93, exceeding the industry average of 2.54. A current ratio above 1 indicates that a company has sufficient assets to cover its short-term liabilities. The company’s strong liquidity positions it to navigate economic uncertainties and enhances its capacity to capitalize on emerging opportunities in the competitive RPA market.

PATH Trades Below Peers, Offers Potential

A steep decline over the past year has resulted in significantly lower valuations. The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 21.76X, considerably below the industry average of 34.14X. This discrepancy suggests that PATH is undervalued compared to its peers, potentially offering an attractive entry point for investors. The reduced P/E ratio reflects market concerns about recent challenges but also signifies a chance for growth-oriented investors to buy at a discount.

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Analysts Upbeat on PATH's Growth Potential

In the past 60 days, analysts have raised seven estimates for fiscal 2026 and two for fiscal 2027 while lowering one estimate for each year. These upward revisions reflect growing confidence in PATH's ability to deliver stronger financial results in the coming years. The adjustments indicate optimism about the company’s strategic direction, operational efficiency, and potential to capitalize on growth opportunities, making it an attractive prospect for investors seeking long-term value in the automation sector.

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PATH Offers a Strong Buy Opportunity

Given UiPath’s strong market position, solid financials, and strategic partnerships with industry leaders, PATH presents a compelling "Strong Buy" opportunity. The stock is currently undervalued, offering an attractive entry point. Analysts have raised their earnings estimates for fiscal 2026 and 2027, reflecting confidence in PATH’s long-term growth prospects in the expanding RPA market.

PATH currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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