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On Thursday, Piper Sandler analyst Arvind (NSE:ARVN) Ramnani adjusted the price target for C3.ai (NYSE:AI) shares, reducing it to $28 from the previous $42, while maintaining a Neutral rating on the stock. The adjustment comes as C3.ai’s shares trade near $26.44, having declined over 23% year-to-date. According to InvestingPro data, the stock is currently trading near its Fair Value. Ramnani’s commentary highlighted C3.ai’s third-quarter performance, which aligned with revenue expectations and showcased better-than-anticipated operating loss results.
C3.ai reported that its partnerships with Microsoft (NASDAQ:MSFT), AWS, and McKinsey QuantumBlack have been instrumental in driving growth for the quarter, reflected in the company’s impressive 21.73% year-over-year revenue growth. These collaborations have notably expanded C3.ai’s sales reach and contributed to shorter sales cycles. The company’s early-stage partnership with Microsoft has already yielded 28 agreements, marking a significant 460% increase quarter over quarter. For deeper insights into C3.ai’s growth metrics and partnership impact, discover more with InvestingPro, which offers exclusive analysis and 10+ additional ProTips.
In addition to these partnerships, C3.ai has launched 20 generative AI pilots with various clients, including Mars and the Department of Defense, along with other government agencies. These initiatives are part of the company’s broader strategy to leverage the potential of enterprise AI. The company maintains strong financial flexibility with a healthy current ratio of 7.52, indicating robust ability to fund these growth initiatives.
The analyst also noted the company’s non-GAAP operating margin performance, which benefited from continued efforts to manage expenses, especially in marketing. Despite the company’s focus on growth over profitability, the expense management efforts have been effective and have contributed to the positive margin outcomes.
C3.ai’s strategic focus on growth is underscored by its prioritization of expanding its enterprise AI solutions over immediate profitability. This approach reflects the company’s recognition of the vast opportunities within the enterprise AI sector.
In other recent news, C3.ai reported its fiscal third-quarter results, revealing earnings per share of -$0.12, which surpassed analyst estimates of -$0.24. The company’s revenue reached $98.8 million, slightly exceeding the consensus forecast of $98.1 million and marking a 26% year-over-year increase. However, the company’s guidance for the fourth quarter and the full fiscal year 2025 aligned with Wall Street expectations, which did not generate significant investor excitement. KeyBanc Capital Markets responded by lowering its price target for C3.ai to $21 from $29, citing concerns over the significant growth in non-recurring demonstration licenses and a decline in core subscription revenue.
Canaccord Genuity also adjusted its price target for C3.ai to $30 from $40, maintaining a Hold rating, due to concerns about the company’s cash burn and growth potential. Meanwhile, Citizens JMP reduced its price target to $50 from $55 but kept a Market Outperform rating, noting the company’s mixed earnings results and a higher-than-expected cash flow deficit. C3.ai’s subscription revenue totaled $85.7 million, slightly above expectations, with a 22% year-over-year growth. The company also highlighted its expanded partnerships and a 72% increase in agreements, including 50 pilot projects, as significant achievements during the quarter.
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