Title: Will C3.ai Stock Reach $55? One Analyst Believes So
C3.ai's shares are currently on a downslide, dropping 6.4% following its latest earnings report on December 9. Despite this, the artificial intelligence software company showed a robust quarter with revenue surging 29% year over year. JMP Securities analyst Aaron Kimson still holds a positive outlook, raising the firm's price target from $40 to $55, implying 41% upside potential.
The reasons behind C3.ai's recent performances include the impending end of its agreement with Baker Hughes, which accounted for 18% of its revenue last quarter. However, revenue without Baker Hughes grew an impressive 41% in the same quarter, showing decreasing concentration risk.
C3.ai's growth prospects are bolstered by its recent strategic partnership with Microsoft's cloud services business. This deal makes C3.ai's offerings available through Azure's vast sales force, potentially increasing the number of sellers from hundreds to 10,000. This partnership is a significant boost to the company's expansion plans.
Analysts expect C3.ai to post revenue growth of 25% in the current fiscal year 2025 and 22% in 2026. For the stock to hit $55, it would either need to significantly exceed these estimates or see an increase in its price-to-sales (P/S) valuation, currently sitting at a high 14.
Looking ahead, C3.ai stock will likely follow the company's revenue growth, though it might take a few years to reach the analyst's price target. Despite the short-term volatility, the stock has the potential for substantial long-term gains, thanks to its impressive deals with major companies like Microsoft.
Investors might consider diverting some of their finance into C3.ai, given its robust financial performance and promising growth prospects. The company's strategic partnership with Microsoft could potentially increase its earning potential, making it an appealing option for those interested in investing in technology stocks.
