JP Morgan analyst Pinjalim Bora maintained an Underweight rating on C3.ai, Inc AI with a price target of $27, down from $28.

C3.ai reported a third-quarter revenue of $98.8 million, up 26%. The revenue total beat a Street consensus estimate of $98.1 million.

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The company had an adjusted net loss of 12 cents per share, which beat a street consensus estimate of 25 cents per share.

C3.ai expects fourth-quarter revenue of $103.6 million-$113.6 million, versus the consensus estimate of $108.6 million.

Bora updated his AI model to include the third quarter of fiscal 2025 results. The price target is based on ~7 times EV/calendar 2026E revenue (unchanged) relative to infrastructure software companies growing FTM revenue over 20%, trading at ~10x EV/calendar 2026E revenue.

The lower price target reflects subpar core growth, adjusted for demo licenses.

The analyst noted that AI should trade at a significant discount to this group as growth is similar but at a much smaller scale for AI. Also, AI is extremely unprofitable compared to the comps.

While AI will likely grow FTM revenue at a comparable growth level (23% versus 24% for the comps’ median), AI is 80% smaller than the median scale of the comp group.

Additionally, AI will likely have (14%) FTM free cash flow margin driving a growth plus margin profile of 9%, versus comps at +22% Unlevered Free Cash Flow (UFCF) margin driving a growth plus margin of +46%. Furthermore, the calendar 2025 adjusted operating margin for AI will likely be (24%) versus comps at +15%.

Price Action: AI stock is down 6.24% at $25.05 at last check Thursday.

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