C3.ai Stock Soars - Analysts Are Bullish On Profitability, 'AI' Theme, New Verticals, Client Engagement & More

C3.Ai, Inc. AI shares are trading higher on Thursday.

Yesterday, the company announced its fourth-quarter financial results after the market closed.  The company reported fourth-quarter revenue of $86.6 million, up 20% year-over-year. The revenue beat a Street consensus estimate of $84.4 million.

Here’s a glimpse into some analyst opinions and reactions to the company’s quarterly performance:

Oppenheimer:

Analyst Timothy Horan reiterated the Outperform rating on C3.Ai, with a price forecast of $40.

Per Horan, profitability was much better than guided, as operating expenses rose at less than half the rate of revenue.

The analyst writes that the “AI” theme is real and durable, with C3.ai well positioned as a pure-play platform to enable enterprises to use GenAI quickly and safely, a Herculean task but with significant long-term benefits.

Horan highlighted C3.Ai’s ability to quickly onboard enterprise customers. Positively, it does have a platform that can also support Chat GPT, and it is seeing strong demand, the analyst adds.

Wedbush Securities:

Analyst Daniel Ives reiterated an Outperform rating on C3.Ai, with a price forecast of $40.

The analyst notes that the company’s partner ecosystem continues to be productive, with bookings from partners growing 76% year over year while closing 28 agreements through its partner network as its go-to-market strategy continues seeing vital pilot adoptions with accelerated enterprise AI product demand.

In the fourth quarter, C3.Ai witnessed 50k inquiries for its Generative AI solutions across 15 different industries as the company continues to deepen into new verticals and improve its diversification across industries. This was a step in the right direction, Ives adds.

DA Davidson:

Analyst Gil Luria reiterated a Neutral rating on C3.Ai, with a forecast of $30.

The company’s go-tomarket is improving through greater traction with partners who are closing more agreements with C3.ai, Luria notes.

The company is keeping its foot on the gas with future investments as its growth improves and the opportunity is large, the analyst adds.

However, Luria cautioned that gross margins will degrade moving forward, despite holding steady quarter on quarter at 70%, given the ramp of investments in pilots, which have a higher cost of revenue associated with them.

Piper Sandler:

Analyst Arvind Ramnani reiterated a Neutral rating on C3.Ai, with a forecast of $29.

While the improved revenue growth in FY24 is a positive, some investors are going to interpret the lower margins as pricing compression, Ramnani flagged.

While the company is bullish on the level of client engagement, and activity, the analyst said that some of that robust interest should translate to higher levels of growth to become more constructive on the company’s name.

Price Action: AI shares are trading higher by 17.4% to $28.08 at last check Thursday.

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