Sign InC3.ai Inc.'s Fundamental and Technical Analysis Suggest Mixed Outlook
Summary
C3.ai Inc. (AI) is currently not profitable and has a negative EPS, leading to concerns about its valuation, although there are indicators of potential growth and a consensus target price of $22.01; therefore, the recommendation for AI's stock is to hold and wait for more solid indicators of profitability and growth. (August 04, 2023)
Fundamental Analysis
The company under review, C3.ai Inc., bears the ticker symbol AI, and is listed on the New York Stock Exchange. As of the close of trading on August 04, 2023, AI has a market capitalization of $4.37 billion and around 115.61 million shares outstanding.
In terms of earnings, AI has an earnings per share (EPS) of -$2.35, resulting in a negative price-to-earnings ratio of -16.09. The negative EPS indicates that the company is currently not profitable, a point of concern for potential investors.
Recent news paints a mixed picture for AI. Some reports have highlighted the potential for a short squeeze, which could provide a significant short-term boost to the stock's price. At the same time, other sources expressed concerns about the company's valuation having risen too quickly, suggesting that the stock may be overvalued.
The consensus target price for the AI stock, derived from various analyst projections, is $22.01, with a high estimate of $31 and a low estimate of $13.
Technical Analysis
Reviewing the stock's key technical indicators, AI's last closing price was $37.8, down by 3.77% or -$1.48. The intraday high and low were $40.68 and $37.66 respectively. The 52-week high and low for the stock stood at $48.87 and $10.16, indicating a high degree of volatility in the stock over the past year.
In terms of volume dynamics, the stock saw a turnover of 19.07 million shares on the last trading day, lower than its average daily volume of 30.01 million shares.
The Relative Strength Index (RSI14) stands at 48, which does not indicate overbought or oversold conditions. The Moving Average Convergence Divergence (MACD) for the last three months is 1.01, and could indicate a potential upward price movement.
Looking at moving averages, AI's 50-day Moving Average of $38.13 is slightly above its closing price, while its 200-Day Moving Average is significantly lower at $22.97, which may represent strong ongoing upward momentum in the stock's price.
Forecasts
Based on the Discounted Cash Flow (DCF) method, the predicted stock price for AI is $40.39. However, given the technical and fundamental factors detailed above, it is possible that the stock may experience some volatility in the near term.
Final Evaluation
Looking at the overall picture, both the technical and fundamental aspects of AI's stock suggest potential upside as well as risks. The DCF projection and the MACD indicate potential for growth, but the negative EPS and high volatility are points of concern.
Considering these points, the recommendation for AI's stock would be a Hold. While the company has potential upside given its exposure to the AI sector, current financial indicators, coupled with the high volatility and concerns about the company's valuation suggest caution. Current investors might prefer to hold and wait for more solid indications of profitability and growth. Potential new investors should carefully weigh the pros and cons before deciding to buy.
