Analyst Sanjit Singh of Morgan Stanley maintained a Sell rating on C3ai, retaining the price target of $11.00.
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Sanjit Singh has given his Sell rating due to a combination of factors impacting C3.ai’s financial performance and outlook. The company reported a 20% year-over-year decline in revenue for the second quarter, despite a modest quarter-over-quarter growth. Furthermore, the guidance for the upcoming quarters suggests continued revenue decline, with a 23% year-over-year drop forecasted for the third quarter and a projected 28% decline by the end of the fiscal year.
Although there were positive signs, such as improved profitability and strong federal sector performance, these were not enough to offset the overall negative outlook. The company’s operating margin, while better than expected, still indicates significant losses. Additionally, despite some improvements in sales execution and an increase in high-value deals, the stock is trading at a high multiple of future sales, which raises concerns about its valuation. As a result, Sanjit Singh remains cautious and maintains a Sell rating as he awaits more consistent evidence of a turnaround in the company’s execution and growth trajectory.
According to TipRanks, Singh is a 4-star analyst with an average return of 5.1% and a 53.51% success rate. Singh covers the Technology sector, focusing on stocks such as MongoDB, Appian, and Datadog.