One of the best-performing IPOs of 2020 was SaaS company C3.ai Inc (NASDAQ: AI). The stock priced at $42, above its initial range of $30 to $33, and closed at $161 in their first week of trading.<\/p>\n
Growth Ahead: C3.ai is called a disruptive enterprise software vendor by Wedbush analyst Daniel Ives.<\/p>\n
It's \"the LeBron of AI setting up for massive growth,\" said Ives,who initiated the company with an Outperform rating and $200 price target.<\/p>\n
C3.ai has a subscription model that could drive 30% revenue growth annually and strong gross margins, said KeyBanc analyst Michael Turits.<\/p>\n
The analyst has a Sector Weight rating on shares of C3.ai based on valuation.<\/p>\n
\"AI is the new internet for the enterprises,\" said Piper Sandler analyst Arvind Ramnani, who rates the stock Overweight with a $166 price target.<\/p>\n
Ramnani said the company's revenue and gross margins are supported by strong gross retention and partnerships that will drive sales.<\/p>\n
Related Link: IPO Outlook For The Week: Airbnb, DoorDash Lead Highly Anticipated Week<\/p>\n
Partnerships: The company's partnerships with Microsoft Corporation (NASDAQ: MSFT) and Baker Hughes (NASDAQ: BKR) area positive for Ives.<\/p>\n
Turits mentioned a partnership with Baker Hughes and said it has a minimum value of $450 million for a five-year contract. Raytheon (NYSE: RTX)and Adobe (NYSE: ADBE) are were also mentioned.<\/p>\n
\"C3 has established lighthouse go-to-market and development partnerships with leaders in industries like energy (Baker Hughes), defense (Raytheon), financial services (FIS) and horizontal partnerships like CRM (Microsoft\/Adobe),\" the analyst said.<\/p>\n
Analysts On C3.ai's Valuation: Wedbush Ives' price targetcomes from a valuation of 27x EV\/revenue for fiscal year 2026.<\/p>\n
Turits is cautious on C3.ai shares due to valuation. The analyst said three customers equal 44% of the company's revenue and has a relatively small number of customers.<\/p>\n
\"Despite its large, dynamic market opportunity, we view AI as fully valued at 82.2x EV\/revenue (CY21E),\" he said.<\/p>\n
C3.ai is valued at 35x 2023 estimated revenue of $325 million by Ramnani.<\/p>\n
Morgan Stanley analyst SanjitSingh initiatedshares with an Underweight rating and $100 price target. The analyst said there is \"compelling growth ahead,\" but success is priced in.<\/p>\n
AI Price Action: Shares of C3.ai were trading down 13.65% at $120.11 at last check Monday.<\/p>\n
View More Analyst Ratings for AI View the Latest Analyst Ratings <\/p>\n
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