C3.ai Sees Stronger Revenue But Analyst Concerned Over Profitability And Scale

Group 1 - JP Morgan analyst Pinjalim Bora maintained an Underweight rating on C3.ai, Inc with a price target of $27, down from $28 [1] - C3.ai reported a third-quarter revenue of $98.8 million, up 26%, beating the Street consensus estimate of $98.1 million [1] - The company had an adjusted net loss of 12 cents per share, which was better than the street consensus estimate of 25 cents per share [1] Group 2 - C3.ai expects fourth-quarter revenue of $103.6 million to $113.6 million, compared to the consensus estimate of $108.6 million [2] - The price target is based on approximately 7 times EV/calendar 2026E revenue, unchanged relative to infrastructure software companies growing FTM revenue over 20% [2] - The lower price target reflects subpar core growth, adjusted for demo licenses [2] Group 3 - C3.ai is expected to trade at a significant discount to its peers due to its smaller scale and higher unprofitability [3] - While C3.ai is projected to grow FTM revenue at 23%, comparable to the comps' median of 24%, it is 80% smaller than the median scale of the comp group [3] - C3.ai is expected to have a (14%) FTM free cash flow margin, resulting in a growth plus margin profile of 9%, compared to comps at +22% UFCF margin and a growth plus margin of +46% [4] Group 4 - The calendar 2025 adjusted operating margin for C3.ai is projected to be (24%), while comps are expected to have a +15% margin [4] - C3.ai stock is down 6.24% at $25.05 as of the last check [4]