TD Cowen Lowers Cerence (CRNC) PT to $12 Following Noisy FQ1 2026 Results

Cerence Inc. (NASDAQ:CRNC) is one of the worst AI stocks to invest in according to Reddit. On February 5, TD Cowen lowered its price target for Cerence to $12 from $13 and kept a Hold rating. The firm characterized the recent financial results as noisy and noted that while there was a significant EBITDA beat in the FQ1 2026 and management confirmed the 2026 guidance, the figures imply an EBITDA shortfall for the remainder of the year compared to consensus estimates.

A day before, Cerence announced that FQ1 2026 was highlighted by a 126% year-over-year revenue surge to $115.1 million, largely driven by a $49.5 million patent settlement with Samsung. This windfall contributed to a record quarterly free cash flow of $35.6 million and a significant gross margin expansion to 86%. Cerence Inc. also reaffirmed its full-year guidance, projecting revenue between $300 and $320 million and targeting increased penetration through its next-generation XUI platform.

The company already secured five major XUI programs with both Western and Chinese automakers, all commanding higher price-per-unit values than previous averages. Additionally, Cerence is expanding its AI portfolio with new Microsoft-integrated work agents and tools for dealership automation. While ongoing IP litigation with Apple and Sony remains a multi-year strategy, the Samsung resolution has established a positive precedent for the company’s monetization efforts across the automotive and technology sectors.

Cerence Inc. provides AI-powered assistants for the mobility/transportation market in the US, the rest of the Americas, Germany, the rest of Europe, the Middle East, Africa, Japan, and the rest of the Asia-Pacific.

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This article is originally published at Insider Monkey.