© Reuters. C3.ai (AI) Stock Crashes 23% After a Big Guidance Miss, Prompts Piper Sandler to Downgrade to Neutral

By Senad Karaahmetovic

C3 AI (NYSE:) stock is down over 19% in premarket trading Thursday after the company’s FY 2023 guidance missed analyst expectations.

C3 AI a Q4 loss per share of 55c on revenue of $72.3 million, while analysts were looking for revenue of $71.3 million. Revenue grew 38% year-over-year. Subscription revenue stood at $56.3 million, up 31% YoY.

For Q1, the company expects revenue in the range of $65 million to $67 million, missing the consensus estimates of $71.6 million. For the full fiscal year, C3 AI expects revenue in the range of $308 million to $316 million, while analysts were looking for $339.6 million.

Piper Sandler analyst Arvind Ramnani downgraded C3 AI from Overweight to Neutral with a price target of $15.00 (from $28.00).

JMP analyst Patrick Walravens cut the price target by over 50% after “mixed results and guidance.” However, the analyst remains positive on AI stock due to:

“1) C3 has built an effective, scalable enterprise AI solution that solves problems with large economic impact in a variety of industries; 2) the addressable market opportunity is massive, at an estimated $191B in 2021; 3) the company has a number of potential opportunities in early stages, including the partnership with Google and the federal government; 4) Mr. Siebel is an experienced technology executive and we expect him to eventually navigate C3 to a good outcome for investors, as was the case with Siebel Systems; and 5) the valuation is attractive at ~2.1x 2023E revenue, C3 has $992.2M in cash reserves on its balance sheet and the company narrowed its non-GAAP operating loss for FY23 to ($86.0M)-($76.0M) versus our prior estimate of ($108.0M),” the analyst wrote in a note.

KeyBanc analyst Michael Turits also described results as “mixed.”

“We continue to view C3 AI as strong in verticalized apps, but retain caution on higher services revenue mix, large losses, a competitive data/analytics market, and potential greater macro exposure given multi-million-dollar average deal sizes,” Turits said in a client note.

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