UiPath (PATH) appears to be stabilizing in fiscal Q2 with improved execution and outperformance across metrics, RBC said in a note on Friday.

The brokerage firm said the automation software maker had a solid quarter and that its federal business is now in a 'normalized' state, a key concern earlier in the year.

RBC said it sees potential for continued upside, though gains may be more modest due to normalized federal assumptions and weaker foreign exchange tailwinds.

While agentic solutions are gaining traction and contributing to larger deal sizes, their financial impact remains limited, RBC said, adding that a material contribution is unlikely before late 2027.

RBC said that, while the stability is encouraging, the firm remains on the sidelines and believes the stock will remain range-bound in the near term as it seeks continued improvement in execution and a more significant agentic contribution to results in a highly competitive agentic orchestration market.

The firm said it maintains a sector perform rating and a $12 price target.