Last week, you might have seen that C3.ai, Inc. (NYSE:AI) released its first-quarter result to the market. The early response was not positive, with shares down 9.5% to US$21.12 in the past week. It was a respectable set of results; while revenues of US$87m were in line with analyst predictions, statutory losses were 10% smaller than expected, with C3.ai losing US$0.50 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on C3.ai after the latest results.
Taking into account the latest results, the consensus forecast from C3.ai's 15 analysts is for revenues of US$382.8m in 2025. This reflects a notable 18% improvement in revenue compared to the last 12 months. Losses are expected to hold steady at around US$2.20. Before this earnings announcement, the analysts had been modelling revenues of US$383.4m and losses of US$2.29 per share in 2025. It looks like there's been a modest increase in sentiment in the recent updates, with the analysts becoming a bit more optimistic in their predictions for losses per share, even though the revenue numbers were unchanged.
The consensus price target fell 12% to US$25.40despite the forecast for smaller losses next year. It looks like the ongoing lack of profitability is starting to weigh on valuations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on C3.ai, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$15.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that C3.ai's rate of growth is expected to accelerate meaningfully, with the forecast 24% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 14% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that C3.ai is expected to grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of C3.ai's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple C3.ai analysts - going out to 2027, and you can see them free on our platform here.
You still need to take note of risks, for example - C3.ai has 2 warning signs we think you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.