In a report released today, Kingsley Crane from Canaccord Genuity maintained a Hold rating on C3ai, with a price target of $16.00.
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Kingsley Crane has given his Hold rating due to a combination of factors impacting C3ai’s current financial performance and future outlook. The company experienced a challenging first quarter with a significant drop in subscription revenue, but the second quarter showed some improvement, although total revenue still fell by 20% year-over-year. Gross margins remained under pressure, and operating margins were far from reaching break-even levels. Despite these challenges, the new CEO, Stephen Ehikian, has shown promising leadership qualities, which could help steer the company in a positive direction.
Moreover, while the company has reinstated its full-year guidance, it is notably lower than previous estimates, reflecting ongoing uncertainties. However, there are positive signs, such as the growth in federal bookings and increased collaboration with major partners like Microsoft and AWS, which could contribute to future growth. Crane’s Hold rating reflects the balance between the potential upside from these strategic developments and the current financial difficulties, suggesting that while there is potential for growth, caution is warranted until more consistent improvements are observed.