Prediction: UiPath’s Stock Will Double in 4 Years

Prediction: UiPath’s Stock Will Double in 4 Years

If you invest in individual stocks, chances are you’re trying to beat the market (often measured by S&P500(annual return of approximately 10%). Otherwise, you’re putting a lot of effort into a practice that could easily be done by purchasing an index fund.

Identifying stocks that are likely to double faster than the market isn’t easy, but it can be done. I am confident that it will outperform the S&P 500. UiPath (NYSE:PATH). Based on its current growth rate and market trends, I believe UiPath can double in four years, much faster than the S&P 500’s typical seven years.

UiPath’s core market is growing rapidly

UiPath is a provider of robotic process automation (RPA) software. This allows its users to automate repetitive tasks, helping them focus on work that requires out-of-the-box thinking. This has two effects. First, it improves employee productivity. Second, it improves morale because employees are no longer mindlessly clicking through the same sequence of operations to create a report.

UiPath also offers artificial intelligence (AI) add-ons, which increase the number of tasks it can automate by using AI to extract insights from internal communications and data.

This is a rapidly growing sector, and Grand View Research predicts that the global RPA opportunity will grow by nearly 40% annually, from $2.94 billion in 2023 to $31 billion in 2030. This is a massive expansion, and UiPath is already taking advantage of it.

In the fourth quarter of fiscal 2024 (ending January 31), UiPath’s annual recurring revenue (ARR) increased 22% year-over-year to $1.46 billion. A quick comparison between Grand View Research’s current industry size estimates and UiPath’s revenue reveals that the company already controls a substantial share of this market, which is a key point for investors.

For fiscal 2025, UiPath expects approximately $1.73 billion in ARR, representing 19% growth. If UiPath can maintain this 19% growth rate for four years, its revenues will double.

However, just because a stock doubles its earnings does not necessarily mean its price will double.

Stock performance will follow company growth

To determine whether a doubling of revenue can cause a doubling of stocks, you also need to consider a stock’s valuation. Sometimes stocks trade at such high premiums that if a company doesn’t double its revenue, it would be disappointing and the stock would be sold. Nvidia is a great example of a title with these high levels of expectations.

Since UiPath is just starting to become profitable, I’ll use its price-to-sales ratio to assess valuation.

Prediction: UiPath’s Stock Will Double in 4 Years

PS PATH ratio table

Unlike many software stocks, UiPath doesn’t trade at an ultra-high valuation: 8.1 times sales could be considered cheap for a software stack. Compared to more mature software companies like Adobe (11 times sales) or even Microsoft (13 times sales), UiPath is much cheaper.

If UiPath achieved a 25% profit margin, its stock would trade at about 32 times earnings, a typical valuation for a software stock.

All of this analysis suggests that UiPath is now reasonably priced, so any stock increases will be tied to its trading results. If UiPath doubles its revenue, its stock price will likely follow the same path due to the low valuation starting point.

I am confident that UiPath stock will double over the next four years if it can maintain its growth rate. I think the RPA market still has a lot of growth ahead, and UiPath is poised to capitalize on that upside. If you are looking for a stock that can crush the market over the next four yearsUiPath is a perfect candidate.

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Keithen Drury holds positions at Adobe and UiPath. The Motley Fool ranks and recommends Adobe, Microsoft, and UiPath. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Mad Motley has a disclosure policy.

Prediction: UiPath Stock Will Double in 4 Years was originally published by The Motley Fool

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