C3.ai downgraded at BofA, targets lowered at multiple rating firms
Dec. 02, 2021 1:50 PM ETC3.ai, Inc. (AI)By: SA News Team10 Comments
- C3.ai (AI) is trading 15.7% lower after posting Q2 earnings and a roster of analysts lowering targets and a BofA downgrade of the stock.
- Wedbush lowered target to $45 from $70, maintaining its Outperform rating; Needham lowered target to $103 from $122 with a Buy rating retained.
- Maintaining its Hold and Underweight rating, Canaccord Genuity and JPMorgan Chase lowered target to $34 and $43 respectively from $50 and $53.
- Piper Sandler cut its price target by 43.6% to $44; analyst Arvind Ramnani believes C3.ai is progressing against key initiatives to transform its growth trajectory but dropped the price target to reflect peer group compression.
- He tells in his research note, the company delivered an FQ2 revenue and margin performance modestly above Street expectations and slightly lifted 2022 guidance.
- Bank of America analyst Brad Sills downgraded C3.ai to Underperform from Neutral, PT $40, down from $65, following what he called a disappointing Q2 report that featured lighter than expected subscription revenue (+32% Y/Y to $47.4M) and a sequential decline in Remaining Performance Obligations (GAAP RPO stood at $465.5M, up from $267.4M a year ago) excluding the impact from the Baker Hughes agreement reallocation from cancellable to non-cancellable RPO.
- The company increased the value of the Baker Hughes contract by $45M to $495M extending its term from five to six years and guaranteeing C3.ai a minimum of $357M of GAAP revenue over the next 3.5 years, through its expansion and restructuring its strategic relationship with Baker Hughes for the second time.
- He is encouraged by the move to non-cancellable RPO, which should provide some revenue visibility, as well as the commentary suggesting meaningful pipeline builds for joint solutions with Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT), but thinks that near-term uncertainty introduced by execution challenges and the departure of CFO David Barter are likely to be an overhang on the shares, Sills said.
- YTD, the stock has lost 75.6%; Wall Street Analysts rating is Neutral.
- SA Contributor Damien Robbins with a Bullish rating recently wrote, "C3.ai: A Winner In The Long Run"