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C3.ai Gets Mixed Reviews as Analysts Initiate Coverage

C3.ai has a strong market opportunity but for now is overvalued, analysts say as they initiate coverage of the artificial-intelligence company.
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Shares of C3.ai AI were lower after Wall Street analysts community initiated coverage of the artificial-intelligence company four weeks after it made its debut on the New York Stock Exchange. 

At last check C3.ai shares fell 8.2% to $127.48. In early December the Redwood City, Calif., company priced an initial public offering of 15.5 million shares at $42. The underwriters had an option on 2.3 million more shares. 

Analysts at Morgan Stanley initiated coverage with an underweight rating and $100 price target, saying that C3.ai's "compelling growth opportunity ahead" is already priced into the stock. 

Bank of America analysts initiated coverage with a neutral rating and $170 price target. They said the company is "well positioned to continue gaining share." 

KeyBanc initiated coverage with a sector-weight rating because C3.ai has a "large, dynamic market opportunity" but the stock is fully valued. 

Other analysts were quite optimisticl=

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Piper Sandler initiated coverage with an overweight rating and a $166 price target. Piper Sandler says C3.ai has "impressive financial metrics and the ability to sustain growth above 30%."

Analysts at Wedbush initiated the company with an outperform rating and $200 price target. 

"We view C3.ai as one of the more disruptive enterprise software vendors in the last decade with the company laser focused on the convergence of AI, big data, and cloud computing," Wedbush analyst Dan Ives said. 

"With a [total addressable market] of $270 billion and a product portfolio that is unmatched in the enterprise landscape, ... C3 has the ability to further penetrate enterprises and governments across the board over the coming years."

For the year ended April 30, C3.ai generated a net loss of $69.4 million, widened from $33.3 million a year earlier.

C3 reported revenue of $156.7 million up from $91.6 million in the prior year. Over the same period, subscription revenue grew 75% to $135.4 million from $77.5 million. Subscription software accounts for 86% of total revenue.