C3.ai, Inc. (NYSE:AI) investors will be delighted, with the company turning in some strong numbers with its latest results. Revenues beat expectations coming in atUS$94m, ahead of estimates by 3.6%. Statutory losses were somewhat smaller thanthe analysts expected, coming in at US$0.52 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the most recent consensus for C3.ai from 14 analysts is for revenues of US$387.7m in 2025. If met, it would imply a meaningful 12% increase on its revenue over the past 12 months. Losses are expected to increase substantially, hitting US$2.45 per share. Before this earnings announcement, the analysts had been modelling revenues of US$382.6m and losses of US$2.26 per share in 2025. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a moderate increase in its losses per share forecasts.
Despite expectations of heavier losses next year,the analysts have lifted their price target 52% to US$36.75, perhaps implying these losses are not expected to be recurring over the long term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values C3.ai at US$56.00 per share, while the most bearish prices it at US$15.00. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that C3.ai's rate of growth is expected to accelerate meaningfully, with the forecast 25% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 13% p.a. over the past three years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% 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 important thing to note is the forecast of increased losses next year, suggesting all may not be well at C3.ai. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
With that in mind, we wouldn't be too quick to come to a conclusion on C3.ai. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for C3.ai going out to 2027, and you can see them free on our platform here..
Before you take the next step you should know about the 3 warning signs for C3.ai (1 can't be ignored!) that we have uncovered.
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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.