Despite an 18% Gain, We Still See 2 Issues With C3.ai That Investors Need to Take Heed Of

Yesterday, C3.ai (AI) jumped more than 18% after the predictive analytics company raised its outlook. While the exact results for the quarter will be available toward the end of May, the preliminary figures are promising.

Revenue looks to be somewhere between $72.1 million to $72.4 million, beating out the previous guidance the company laid out for the quarter. Moreover, the loss for the quarter will be narrower than anticipated. Rather than an adjusted operating loss of as high as $28 million, the company expects to report somewhere between $23.7 million to $23.9 million.

All of this is the result of record-high interest in applying predictive analytics – the company’s main focus. And according to C3.ai executives, demand doesn’t appear to be slowing down any time soon.

With a client roster that already features names like Bank of America, Shell, and 3M, the company’s sales pipeline has increased by over 100% in the past year.

Beyond raising the outlook for the quarter, C3.ai released more positive news Monday. They laid out the results of an investigation into claims made by short sellers – showing no evidence of wrongdoing.

The press release went on to say that these claims lobbied by Kerrisdale and Spruce Point appear to be a “highly creative and transparent attempt by a self-acclaimed short seller to short the stock, publish an inflammatory letter to move the stock price downward, then cover the short and pocket the profits”.

In the past year, AI stock is up nearly 40%. With yesterday’s news cycle, it appears that another positive price trend is in the midst of forming as well.

However, we do see two issues with this stock that shareholders and prospective investors need to take heed of. See what we uncovered through the VectorVest stock analyzing software below…

Despite Fair Timing, AI Has Poor Upside Potential and Safety Right Now

The VectorVest system simplifies your trading strategy by giving you clear, actionable insights in just 3 ratings. These are relative value (RV), relative safety (RS), and relative timing (RT). Each rating sits on its own scale of 0.00-2.00, with 1.00 being the average.

And, based on the overall VST rating for a stock, VectorVest offers a buy, sell, or hold recommendation - helping you win more trades with less work. As for AI, here’s what you need to see before you make your next move:

• Poor Upside Potential: The RV rating is an indicator of a stock’s long-term price appreciation potential, comparing a 3-year price projection to AAA corporate bond rates and risk. As for AI, the RV rating of 0.61 is poor. And, the stock is overvalued as it sits today. The current value is just $7.97.
• Poor Safety: In terms of risk, AI has poor safety - with an RS rating of 0.74. This is derived through a deep analysis of the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity.
• Fair Timing: The one thing AI has going for it right now is a fair RT rating of 0.93. While it’s below the average, it appears as if the rating could be headed in the right direction - signaling a positive price trend. This rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year.

The overall VST rating of 0.79 is poor for AI - so does that mean it’s time to sell? Or, should you hold your position a bit longer to see how the stock performs in the coming days or weeks?

Get a clear answer on your next move through a free stock analysis at VectorVest today - helping you execute your trade in confidence!

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VectorVest advocates buying safe, undervalued stocks, rising in price. While yesterday was a great news day for the company, the timing for AI is still just fair as of now - with poor upside potential and safety holding it back as well.

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