According to certain Wall Street analysts, you should buy two growth stocks before they rise 212% and 712%, respectively

The S&P 500 (^GSPC -0.13%) is up 20% year to date, driven by strong interest in artificial intelligence and surprisingly robust economic growth. But certain Wall Street analysts believe so UiPath (AWAY 1.67%) And Roku (ROKU 0.96%) are undervalued.

• Sanjit Singh Morgan Stanley UiPath has set a bull-case price target of $40 per share by September 2025. This forecast implies an upside of 212% over the current share price of $12.80
• Nicholas Grous and Andrew Kim of Ark Invest have set a base price target of $605 for Roku by December 2026. This forecast implies a 712% upside from the current share price of $74.50.

In general, investors should never rely too much on price targets, especially if they come from individual analysts. You shouldn’t take the implied profits for granted either. But UiPath and Roku require further consideration.

UiPath: 212% implied upside

UiPath specializes in Robotic Process Automation (RPA), one of the fastest growing software markets. The business automation platform includes task and process mining tools that help users identify automation opportunities, as well as development tools that help users build software robots that can automate these tasks and processes.

According to Morgan Stanley, UiPath is the “clear category-defining leader” in RPA, but analysts have recognized the company in other areas as well. For example, International Data Corp. recently recognized UiPath as a leader in Intelligent Document Processing (IDP) software, which combines artificial intelligence and RPA to automate tasks such as document classification, data extraction and sentiment analysis.

UiPath reported mixed financial results in the second quarter of fiscal 2025 (ended July 31). The average customer spent 15% more and revenue increased 10% to $316 million. However, non-GAAP gross margin fell about three percentage points and adjusted earnings fell 55% to $0.04 per diluted share. However, investors have reason to be cautiously optimistic.

UiPath brought back co-founder Daniel Dines as CEO in June to improve sales execution, particularly when it comes to growth products like intelligent document processing, and to steer the company through an uncertain economy. Improvements will take time, but Dines said he was encouraged by early progress in the second quarter. “I am particularly pleased with the success we have achieved with our IDP solutions.”

Looking forward, Wall Street expects UiPath to grow revenue by 10% annually through fiscal year 2026 (ending in April 2026). This estimate leaves room for upside as the RPA market is expected to grow 40% annually through 2030. However, the current valuation of 5.2x sales is reasonable even if the Wall Street consensus is correct.

Without a significant acceleration in growth, UiPath shareholders have very little chance of triple-digit returns next year. But investors willing to hold the stock for at least three to five years should consider buying a small position today. UiPath could be a worthwhile turnaround story.

Roku: 712% implied upside

Roku’s streaming platform connects consumers, content publishers and advertisers. The Company monetizes paid content by charging fees for transactions processed through Roku Pay, and it monetizes ad-supported content by selling inventory and ad-tech software. Roku sources advertising inventory from content publishers on the platform, but also operates an ad-supported service called The Roku Channel.

In terms of streaming time, Roku is the most popular streaming platform in the US and the company is well positioned to maintain its leadership position. Roku OS is the best-selling TV operating system in the US, Canada and Mexico, indicating brand authority. In fact, Roku OS was more popular in terms of TV sales in the second quarter than the next two operating systems combined.

Roku reported encouraging second-quarter results. The number of active accounts increased by 14% and streaming hours increased by 20%, meaning the average account interacted with the platform more often. In turn, revenue rose 14% to $968 million and adjusted EBITDA improved to $44 million, compared to a loss of $18 million a year ago. Investors have good reason to believe the company will maintain its momentum.

In addition to the fact that Roku is the most popular streaming platform in North America, The Roku Channel is the eighth most popular streaming service in the US, ahead of Max Warner Bros. Discovery and Paramount+ from Paramount Global. This puts the company well-positioned to benefit as streaming accounts for a larger share of viewing time and advertisers spend more on connected TV (CTV).

Wall Street expects Roku’s revenue to grow 13% annually through 2025, but that estimate leaves room for upside. CTV advertising spending is expected to grow 12% annually over the same period, and Roku’s leadership position in North America (coupled with its growing presence in international markets) could result in faster-than-expected growth.

However, the current valuation of 2.8 times sales is reasonable, even if the Wall Street consensus is accurate. Personally, I think Ark’s price target of $605 per share is absurdly high. But I also believe Roku can beat the S&P 500 in the next three to five years. Therefore, patient investors should feel comfortable buying a small position today.