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Investing.com -- Bank of America downgraded UiPath (NYSE:PATH) to "Underperform" from "Neutral" and slashed its price target to $10 from $14 given weak outlook amid macroeconomic weakness and a lack of near-term catalysts for growth.
The firm highlighted a disappointing fiscal 2026 outlook, with annual recurring revenue (ARR) growth guidance of 9% versus its previous 14% estimate. While UiPath attributed the slowdown to macro pressure in its Federal vertical, BofA noted signs of broader weakness that could persist.
Growing AI budgets are encroaching on UiPath’s robotic process automation end market, BofA analysts wrote, adding that CIOs and CFOs appear to be prioritizing AI-driven agents over traditional automation bots.
UiPath’s fourth-quarter revenue of $424 million slightly missed BofA’s $425 million estimate. The firm also flagged weakening growth metrics, including a 1% year-over-year decline in total customer count and a drop in net revenue retention (NRR) to 110% from 113% in the prior quarter.
BofA further noted that UiPath’s implied fiscal 2026 operating margin guidance of 17.7% suggests the company will be operating at a "rule of 25," making margin expansion and growth acceleration difficult. It sees UiPath’s total addressable market (TAM) as increasingly uncertain.
While the stock's valuation at 2.7x calendar 2026 estimated revenue limits downside risk, BofA sees few upside drivers
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