Shares of UiPath (PATH -0.32%) recently jumped higher in response to third-quarter results that led to mixed messages from Wall Street analysts who follow the stock. Wells Fargo and Mizuho raised their price targets, while JPMorgan Chase and Truist Financial lowered theirs. 

With all the ups and downs from the experts, individual investors are justifiably confused about whether UiPath is a good stock to buy now or not. Let's look at the company's recent performance to see if buying its stock still makes sense.

Why the lower price target?

In a nutshell, UiPath helps companies build software robots so their employees don't need to behave like robots. The service is popular, but it isn't growing as quickly now as it was a year ago. 

The company has lots of international customers and it offers pricing in local currencies. This means a strengthening dollar isn't turning away business, but it is affecting the company's reported performance. Truist Financial analyst Terry Tillman lowered his target for UiPath from $25 to $20, citing currency exchange headwinds. 

UiPath measures its top-line performance with a unique metric called annualized renewal run-rate (ARR) that highlights its ability to acquire new subscribers while maintaining and expanding relationships with existing customers. In its third quarter, ARR soared 36% year over year, or 38% if we ignore the effect of a strengthening dollar.

A deceleration or a sign of strength?

The 36% ARR growth that UiPath reported during its third quarter isn't anything to be embarrassed about, but business is decelerating. Since the first quarter of 2021, ARR has grown at a 51% compound annual rate.

Before getting too worked up about the deceleration, it's important to remember that COVID-19 lockdowns made 2021 a blowout year. In addition to difficult comparisons this year, UiPath had a significant operation in Russia that it had to shut down in response to the invasion of Ukraine.

I'll be keeping at least one eye on UiPath's growth rates in the quarters to come. For now, though, I'm impressed by the company's ability to attract new business and retain existing clients despite difficult macroeconomic conditions.

An investor looking at stock charts on two devices at the same time.

Image source: Getty Images.

A buy now?

Shares of UiPath have fallen around 66% in 2022, but the stock isn't necessarily cheap. Right now, it's trading at more than 229 times forward-looking earnings expectations. This means any signs of trouble on the company's path to improving profit margins could lead to another stock market beatdown.

Despite a very high valuation, UiPath stock at recent prices appears well worth the risk. Helping organizations manage automation programs is an industry in its very early days, and UiPath already has a leadership position. The Everest Group, a management consultant, recently ranked robotic process automation vendors. UiPath's platform scored first place both in terms of capabilities and market impact.

According to the Everest Group, UiPath's process automation platform even outperformed the enterprise software behemoth Microsoft (MSFT 0.74%). Instead of competing directly against UiPath, Microsoft has made it a preferred enterprise-automation partner that will help bring solutions powered by Microsoft Azure to market. This important partnership with a leading cloud service provider will help UiPath maintain its current lead in the process automation space.

I wouldn't criticize anyone for letting a nosebleed-inducing valuation turn them away from this stock. That said, adding some shares to a well-diversified portfolio at recent prices looks like a very smart move to make right now.