c3.ai Plunges 20% After Q4 Print: Why This Analyst Is Upgrading The Stock

Shares of C3.ai, Inc. AI fell over 21% in premarket trading on Thursday as investors took exception to the company's conservative forward guidance.

Notwithstanding the stock reaction, an analyst at Wedbush upgraded the shares of the company.

The c3.ai Analyst: Daniel Ives upgraded the shares of C3.ai from Neutral to Market Perform and hiked the price target from $24 to $50.

The c3.ai Thesis: Although the road ahead is bumpy, c3.ai has turned the corner and is ready to capitalize on the $800 billion artificial intelligence opportunity over the next decade, Ives said in a note.

The company is in a "unique position to help lead the charge and monetize this" in the next 12-18 months, he said.

Delving into the results, the analyst noted that the company's fiscal year 2023 fourth-quarter top- and bottom-line exceeded estimates. The positive results were largely overshadowed by some conservative revenue guidance for the fiscal year 2024 amid the transition to a consumption-based pricing model, he added.

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The move to a consumption-based pricing model, according to the analyst, will prove to be a good long-term strategic move. The company can continue to monetize on its Generative AI suite, with demand and use cases in the field continuing to expand by the day across verticals, the analyst said.

"With the company aiming to be cash positive and non-GAAP profitable by FY24, we believe that this quarter was another major step in the right direction for the c3 story and underscores our increased confidence in the c3 AI-driven story," Ives said.

Price Action: In premarket trading on Thursday, the stock fell 19.72% to $32.12, according to Benzinga Pro data.

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