Chicago, IL – March 21, 2024 – Zacks Equity Research shares UiPath PATH as the Bull of the Day and Vail Resorts MTN as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Ford F, General Motors GM and Stellantis STLA.
Here is a synopsis of all five stocks.
UiPath is a Zacks Rank #1 (Strong Buy) that offers an end-to-end platform for automation, combining Robotic Process Automation (RPA) solutions for digital business operations.
The stock is well off the post-IPO highs it made back in 2021, but the bulls have started to come back into the name after some strong earnings reports. With PATH up over 100% off the 2022 lows, the question is if there is any more meat on the bone for the rest of 2024.
UiPath has an interesting background that started in 2005 with ten people working in a small apartment in Bucharest, Romania. The company now employs over 3,800 people and has a market cap of $13 billion.
The stock has a Zacks Style Score of “B” in Growth and “A” in Momentum. It sports a Style Score of “F” in Value, with a Forward PE of 40.
UiPath provides a robotic process automation (RPA) platform that uses AI to automate repetitive tasks and streamline business operations.
In case you are not yet aware, RPA is a technology that allows businesses to automate repetitive and rule-based tasks by using software robots, often referred to as "bots." These bots can mimic human interactions with digital systems, such as navigating through user interfaces, interacting with applications, and performing data entry.
Since the IPO back in 2021, UiPath has never missed on earnings. The company continues to beat expectations and in March reported a 47% EPS beat, which brought the earnings winning streak up to twelve.
Fourth quarter operating income came in at $110.5M v $69.2M last year. And revenues were $405M v the $383M expected.
PATH achieved GAAP profitability and Annual Recurring Revenue (ARR) was up 22% year over year at $1.46B.
While the Q1 guide came in slightly below expectations, ARR is expected to come in at $1.51B.
Analysts were positive after the quarter with many hiking estimates and price targets. Bullish analysts cite ARR growth, GAAP profitability, and RPO growth as reasons to buy the stock.
The company is seeing earnings estimates slowly turn higher over the short term but accelerate for the current year.
For the current quarter, numbers have gone up 10% over the last week, moving from $0.10 to $0.11. For the current year, estimates have gone higher by 16% over that same time frame, moving from $0.49 to $0.57.
Let’s go over some analyst price targets:
-Truist lifted estimates and raised its price target from $28 to $32.
-Mizuho Securities reiterated PATH with Neutral, lifting its price target to $25 from $22.
-BMO Capital Markets reiterated PATH with Market Perform, with a price target of $28, up from $24.
-JPMorgan raised PATH with Outperform I, bumping its target to $28 from $22.
There were a lot of targets being lifted after earnings, with most being in the $25-30 range.
Looking at the technicals, the stock has struggled since the IPO in 2021 but has recently started to show some major life.
In the Spring of 2021, UiPath priced its IPO at $56. There was much excitement about the stock and it surged to $69 on its first day of trade. After topping out at $90, the stock saw a steady decline, eventually falling to a low of $10.40 in late 2022.
Since that low, the stock has bounced over 150% but has since traded sideways. The recent earnings report did not give investors enough to justify the valuation so the stock went from green to red after the report.
While the stock is currently trading below the 50-day MA, the $22 level has been held as support. If the level were to break the 200-day is at $19.50.
Additionally, a 61.8% Fibonacci retracement resides at $19.75 and a move to this level would be a gap fill from the earnings reported in Q4 2023.
If the stock came into these levels and held, investors would want to pounce. If the bulls do not allow this entry, investors might have to chase the stock if it gets back over $26. The $30 level provides multiple Fibonacci targets.
The last couple of years have been tough for UiPath investors. Since the IPO, the stock is still down over 70% from those post-IPO highs.
However, there are now many reasons to be bullish on this AI play.
The AI momentum will accelerate throughout the year, which will help revenues and earnings growth in 2024. With that, the stock has a lot of room to run if it can continue to grow into the valuation.
If the company can continue to beat earnings expectations, the bulls will likely take the stock to $30 and beyond. In the meantime, investors should be looking for entry points before the stock continues its uptrend.
Vail Resorts is a Zacks Rank #5 (Strong Sell) that operates mountain resorts and regional ski areas. The company operates 41 mountain resorts and ski areas.
The stock has traded sideways over the last year as investors wait for the snow to fall. However, short winter seasons have stalled this company’s growth and the stock is struggling to get back to the summit that was achieved in 2021.
Vail Resorts was founded in 1845 and is based in Broomfield, CO. The company employs over 7,000 people and operates through three segments: Mountain, Lodging, and Real Estate.
The mountain segment was 88% of 2023 revenue, while lodging was close to 12% and Real Estate was 0.3%.
MTN is valued at $8 billion and has a Forward PE of 28. The stock holds Zacks Style Scores of “B” in Growth, but “F” in Value. After the company hiked the dividend, the stock pays a yield of about 4%.
Q2 Earnings
Vail Resorts has a difficult time beating earning expectations, with the company missing six quarters in a row.
On March 11th, the company posted another miss of 5%. Revenues came in below expectations and Vail cut its FY24 outlook.
Total skiers were 7.26M v the 7.7M expected and RevPAR was down 4.4% y/y. EBITDA was higher versus last year, but the FY24 guide was lowered.
Management cited weather disruptions as a reason for the underperformance but was hopeful for the rest of March and April.
However, analysts do not seem to be convinced yet as estimates continue to trend lower.
Over the last 30 days, earnings estimates for the current quarter have fallen from $10.69 to $10.08, a drop of 6%.
For the current year, estimates have dropped from $8.95 to $7.90, or 12% over that same time frame.
Next year does not look any better. Since EPS, earnings estimates have dropped from $10.45 to $9.70, a move lower of 7%.
While analysts drop estimates, their price targets remain in the 200-260 range. The stock is trading right in the middle of that range, as investors wait out the storm while collecting the dividend.
After COVID, the stock crashed to $125 as many resorts were shut down. However the demand to hit the slopes was high when the pandemic ended and the stock hit $375.
In early 2022 the stock fell to $200 and has since been in a trading range from $200-260.
Looking at moving averages, the stock is having trouble with the 200-day MA but is currently over the 50-day MA.
At best, the stock looks like dead money unless it can break out of the range. While some investors accept that idea with the 4% dividend, a move under $210 would put pressure on some to sell.
Whether an investor pin’s fault of the weather challenges on climate change or bad luck, Vail has an issue getting people on the Mountain. While there are sporadic periods of good weather, it has been challenging to put together a good skiing season.
Until that trend changes, investors will avoid the stock and hide in the lodge, before hitting the slopes.
For those interested in the Leisure and Recreation space, a better option might be Royal Caribbean. The stock is a Zacks Rank #2 (Buy) that is trading close to 2024 highs.
Amid slowing electric vehicle (EV) sales, the U.S. government has announced the relaxation of emission rules and adjustments to fuel economy requirements for EVs. This recalibration will affect not only traditional automakers who have been stepping up their electrification efforts but also the broader EV industry. This move is being celebrated by legacy automakers as it provides them more time for a gradual transition to EVs, thus avoiding potential financial penalties that could have risen from strict compliance demands.
In this write-up, we dive into the specifics of the regulatory changes, examining the balance between environmental goals and the practical challenges of transitioning to zero-emissions vehicles and assessing the implications of these changes on automakers such as Ford, General Motors and Stellantis.
While GM sports a Zacks Rank #1 (Strong Buy), F carries a Zacks Rank #2 (Buy), Meanwhile, STLA currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Department of Energy (“DOE”) and the Environmental Protection Agency (“EPA”) have jointly unveiled modifications to the existing framework governing vehicle emissions and fuel economy.
The DOE has relaxed the initially proposed drastic reduction in EV mileage ratings, a move that now allows automakers more leeway to produce gas-powered vehicles while still meeting the Corporate Average Fuel Economy (“CAFE") standards through 2030. Initially, a 72% cut in EV mileage ratings by 2027 was proposed, but the final rule opts for a more gradual phase-in, culminating in a 65% reduction by 2030.
The EPA’s revised vehicle emission requirements echo this sentiment, opting for a gradual implementation that acknowledges the current state of EV sales and consumer adoption challenges. By moderating the increase in standards from 2027 to 2029 and then ramping up to the preferred levels from 2030 to 2032, the EPA aims to strike a balance between ambitious environmental goals and the practical realities of the automotive market.
The revisions have come at a time when the uptake of electric vehicles has shown signs of slowing down, attributed to consumer concerns over costs, range and the availability of charging infrastructure. By moderating the pace of EV adoption required in the short term, the EPA aims to align environmental objectives with the practical aspects of market readiness and consumer acceptance.
The regulatory adjustment comes as a reprieve for major automakers who faced the daunting prospects of hefty fines under more stringent regulations. General Motors could have been subjected to $6.5 billion in fines, with Stellantis and Ford facing $3 billion and $1 billion, respectively, through 2032. The softened stance by the DOE is a financial relief, ensuring that these companies can transition to EVs at a more manageable pace without the immediate threat of punitive financial penalties.
The automotive industry’s reaction to these changes has been predominantly positive. The Alliance for Automotive Innovation, representing industry giants, has lauded the adjustments, emphasizing that the initial proposals could have disincentivized EV production due to the financial burdens of CAFE penalties. While the push toward electrification is imperative, it must be balanced with achievable targets to ensure a smooth transition.
Meanwhile, environmental groups, while recognizing the need for realistic standards, emphasize the importance of ambitious goals to significantly reduce carbon emissions from vehicles, a critical factor in combating climate change.
The relaxed emission rules and fuel economy requirements represent a recognition of the complex interplay between environmental ambitions and the realities of technological development and market dynamics. By allowing automakers like Ford, General Motors and Stellantis a more flexible timeline to meet these standards, the government is fostering an environment conducive to innovation and gradual adoption of EVs. As the industry progresses on this adjusted path, the collaborative effort between policymakers, automakers and environmental advocates will be paramount in ensuring the successful realization of environmental goals.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
https://www.zacks.com
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ford Motor Company (F) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
UiPath, Inc. (PATH) : Free Stock Analysis Report
Vail Resorts, Inc. (MTN) : Free Stock Analysis Report
Stellantis N.V. (STLA) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
