c3.ai (AI) PT Raised to $28 at JPMorgan

JPMorgan analyst Pinjalim Bora raised the price target on c3.ai (NYSE: AI) to $28.00 (from $19.00) while maintaining a Neutral rating.

The analyst comments "We are updating our AI model to include 2QFY25 results. We are establishing our Dec 2025 PT of $28 (previously Dec-2024 $19) based on ~7x EV/CY26E revenue (previously ~5x EV/CY25E) relative to infrastructure software companies growing FTM revenue over 20% (NET, CRWD, DDOG, SNOW, GTLB, ZS, CYBR, S) trading at ~10x EV/CY26E revenue. We think AI should trade at a significant discount to this group because of a couple of reasons: 1) growth is similar but at a much smaller scale for AI; 2) AI is extremely unprofitable as compared to the comps. While AI is expected to grow FTM revenue at a comparable growth level (25% vs. 24% for comps median), AI is 80% smaller than the median scale of the comp group. Additionally, AI is expected to have (10%) FTM FCF margin driving a growth plus margin profile of 14%, vs. comps at +23% uFCF margin driving a growth plus margin of +46%. Furthermore, CY25 PF operating margin for AI is expected to be (30%) vs. comps at +15%."

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