Street Calls of the Week
On Thursday, DA Davidson made adjustments to its outlook on C3.ai (NYSE:AI) shares, increasing the price target from $18.00 to $25.00 while retaining a Neutral rating on the stock. Currently trading at $23.02, the stock has shown significant volatility, ranging between $17.03 and $45.08 over the past 52 weeks. The revision comes in the wake of C3.ai’s fourth-quarter earnings for the fiscal year 2025, which saw the company’s shares climb as it met guidance expectations and announced the extension of its joint venture with Baker Hughes (NASDAQ:BKR). According to InvestingPro data, the company maintains strong liquidity with a current ratio of 6.74.
C3.ai’s total revenue displayed stability, seemingly unaffected by the broader macroeconomic uncertainties, with impressive year-over-year growth of 23.79% and a healthy gross profit margin of nearly 60%. However, there was a noted deceleration in subscription revenue. Despite this, the firm recognized an improvement in partner contributions to new agreements closed during the quarter. This uptick is attributed to C3.ai’s enhanced investment in its go-to-market (GTM) strategy with partners. InvestingPro analysis reveals several additional insights about C3.ai’s financial health, which currently rates as "FAIR" with an overall score of 2.01 out of 5.
The company’s steady performance and strategic partnerships have played a key role in DA Davidson’s revised price target. The analyst from DA Davidson highlighted the importance of these developments, stating, "C3.ai reported 4Q25 earnings with shares rising after guidance met expectations and C3.ai announced the renewal of its joint venture with Baker Hughes. Total (EPA:TTEF) revenue growth was stable as macro uncertainty did not impact the quarter though subscription revenue decelerated. Partner contribution to new agreements closed improved in the quarter as C3.ai invests further in its partner GTM motion. We maintain our NEUTRAL rating."
The maintenance of the Neutral rating suggests that while the analyst acknowledges the positive aspects of C3.ai’s performance and strategic moves, they remain cautious about the company’s future prospects. The raised price target to $25.00 reflects a more optimistic view of the stock’s potential value, taking into account the recent earnings report and business developments.
In other recent news, C3.ai has reported a 26% year-over-year increase in total revenue for Q4 2025, reaching $108.7 million, slightly surpassing expectations. The company’s subscription revenue showed a 9% growth, although it fell short of consensus estimates by 9%, highlighting a slowdown from the previous quarter’s 22% growth. C3.ai’s partnership with Baker Hughes was renewed for an additional three years, a key factor contributing to the company’s revenue performance. Despite these positive developments, analysts at Morgan Stanley (NYSE:MS) and JPMorgan have expressed concerns about the company’s long-term growth prospects, with Morgan Stanley maintaining an Underweight rating and JPMorgan reducing the price target from $27 to $23. Conversely, JMP analysts have kept a Market Outperform rating with a $50 price target, citing confidence in the company’s strategic partnerships and recent financial results. The company also reported a non-GAAP EPS of ($0.16), beating the consensus estimate of ($0.20), and a free cash flow of $10 million, indicating improvements from previous quarters. These developments have led to mixed reactions from analysts, reflecting both optimism and caution regarding C3.ai’s future performance in the competitive AI industry.
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