I think shares in this AIM-listed robotics process automation company could soar

Shares in a robotics process automation company could soar soon, I think, as the Covid crisis forces companies to adopt more automation products.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in a robotics process automation company could soar soon, I think, as the Covid-19 crisis forces companies to adopt more automation products.

In these difficult times, it’s hard to get business done. That even applies to companies providing services that could support companies during the lockdown. AIM-listed Blue Prism (LSE:PRSM) is a case in point.

Robotics process automation, or RPA, doesn’t have an awful lot to do with robots, not in the traditional sense. Rather RPA is about software automation. It’s about automating processes, applying what the industry calls digital workers — which is actually a specific type of code — to carry out the repeatable, well-defined, but mind-numbingly boring tasks that are vital to many large corporations. It is sometimes called business intelligent automation.

I believe that in the post-Covid-19 world, we will see an acceleration in companies adopting digital technologies including RPA.

RPA and the lockdown 

But actually, even during the crisis, RPA is in high demand from organisations battling the virus.

For example, Blue Prism technology is being used by the NHS to automate a dashboard that provides information on essential data enabling NHS staff to monitor patients.

Blue Prism has also launched a Covid-19 response programme, applying digital workers to support business critical operations.

Despite this, Blue Prism shares have taken a hammering. They have dropped around 33% from the year’s high and are less than half the all-time high share price set in 2018.

It does appear that the company, like most businesses, has suffered during the lockdown. It is, after all, difficult to sell to staff who are on furlough.

The company has responded with a couple of developments that may concern some shareholders.

Fundraising

First, it has raised £100m from existing and new investors. Second, a few days ago, founder Alastair Bathgate announced he was stepping down as CEO after 18 years at the helm. Executive chair Jason Kingdon is taking over as the new CEO.

I know that some might see this as a bad sign. In fact, in the area Blue Prism operates in, its funding to date has been quite modest, perhaps too modest. Its two main rivals, UiPath and Automation Anywhere, have raised far more in the past. It is even possible that Blue Prism has used the Covid-19 crisis to justify a fund raising that it might have needed anyway.   

The company stated that the money raised will help boost “balance sheet strength in case of prolonged disruption during the period of uncertainty relating to the Covid-19 pandemic“. It also expects the money to support the company’s efforts to reach a cash flow break-even point. 

Armed with this substantial cash buffer, I think that Blue Prism is well placed to start expanding. After this crisis, we will see an acceleration in the number of companies adopting automation technologies. I think Blue Prism shares will recover the losses seen this year and may well surpass the 2018 peak.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Michael Baxter has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »