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-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.