Analysts reboot Palantir stock price target after earnings

This is what could happen next to Palantir shares.

May 8, 2024 - 06:30

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Analysts reboot Palantir stock price target after earnings

Alex Karp didn't hold back on Monday night

"I think it is fair to say we crushed Q1 in the U.S.," the Palantir (PLTR) chief executive said. "We are on fire."

Karp told analysts during the first-quarter earnings call that the Denver data-integration and software provider, which offers services that help businesses deploy artificial intelligence applications, is "winning in the U.S."

"And the main reason is we built software infrastructure that allows enterprises, both commercial and government, to move beyond chat, move beyond self-pleasuring, to actually produce things that are valuable," he said.

Palantir's sales are largely driven by helping the U.S. government with its counterterrorism efforts, but the company has also pushed more deeply into managing, interpreting and reporting data for large companies.

Palantir Co-Founder and Chief Executive Alex Karp
Palantir/TheStreet

"But, you know, our mission footprint, whether it's in Ukraine, Israel, or in United States government, is stunning," he said. "There is basically no conflict in the world ... where western allies are involved, and the battlefields involved and the stakes are life and death, where Palantir is not the first call."

Karp told analysts that he does not believe Palantir, which was co-founded by the billionaire investor Peter Thiel, has competitors.

"So, I don't believe in the U.S. commercial market we have competition," he said. "I don't believe in the U.S. government market we have competition. I think that's the reason Ukraine and Israel bought our product."

"We are differentiated because in order to actually make AI work, you need an ontology," he added. "No one has an ontology." (Merriam-Webster says that's "a branch of metaphysics concerned with the nature and relations of being.")

Wedbush's Ives: PLTR selloff 'golden opportunity'

Palantir reported adjusted first-quarter earnings of 8 cents a share, matching the LSEG estimate. Revenue rose 21% to $634.3 million from $525.2 million, with the latest figure surpassing the LSEG estimate of $625 million.

The company raised the midpoint of its expectations for annual revenue to $2.68 billion, which fell short of the LSEG estimate of $2.71 billion.

Palantir shares slumped on May 7, down 15% to $21.50 at last check.

William Blair analyst Louie DiPalma said the stock is "likely down because U.S. commercial revenue growth sharply decelerated to 40% from 70% last quarter.”

"This is a focus for investors because of the [artificial intelligence] push," DiPalma said, according to Investors Business Daily. The analyst rates the stock underperform.

RBC Capital raised the firm's price target on Palantir to $9 from $5 but affirmed an underperform rating on the shares. The investment firm's analysts said the earnings beat-and-raise was largely priced in.

The firm said that Palantir's quarter was “decent,” with government revenue boosted by the Titan deal, the U.S. Army’s next-generation ground system enabled by artificial intelligence and machine learning.

RBC said Palantir's commercial-segment upside was driven entirely by pulled-forward SPAC revenue, and its concerns on the sustainability of growth and margins remain unchanged.

Palantir has invested more than $400 million into nearly two dozen SPAC targets, according to RBC. These are companies that went public through special-purpose-acquisition deals instead of through the traditional IPO process.

Meanwhile, Wedbush analyst Dan Ives maintained his outperform rating on Palantir and a $35 stock price target.

Ives told investors in a research note that he was "laser-focused on the AI story playing out with (artificial-intelligence platform) leading the way, and Palantir delivered robust numbers on this front yet again."

The analyst said, "Any modest selloff post-print is a golden buying opportunity for this pure-play AI name."

"We continue to see increased momentum in the PLTR growth story with AIP leading the charge in generating significant demand across both commercial and government landscapes while well-positioned to gain a larger share of this $1 trillion opportunity taking place with AI use cases exploding globally," Ives said.

His optimism is echoed by TheStreet Pro's Stephen Guilfoyle.

"You will search for a long time before you find another balance sheet as clean and strong as this one," said Guilfoyle. "I really do not think that we are in the seventh, eighth, or ninth innings of Palantir's run. I honestly believe we are in the second or third inning and that Palantir eventually becomes a, if not the dominant player in big data analytics."

D.A. Davidson: PLTR bootcamps a growth driver

HSBC raised the firm's price target on Palantir to $23 from $22 and kept a hold rating on the shares.

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The company posted a strong beat at the operating level in the first quarter as the U.S. commercial segment drove sales growth, analysts told investors in a research note. HSBC said the growth acceleration is largely priced into the shares.

Deutsche Bank analysts boosted the firm's price target on Palantir to $20 from $18 and kept a sell rating on the shares.

The company reported an "upbeat" first quarter, led by sustained momentum in its U.S. commercial business. The analyst tells investors in a research note that it is one of the earlier software companies to meaningfully monetize generative artificial intelligence.

However, the firm says Palantir's ability to drive stronger growth acceleration in 2024 is being constrained by its government and international commercial businesses "that aren't yet seeing similar AI tailwinds as U.S. Commercial."

Citi raised the firm's price target on Palantir to $25 from $23 and kept a neutral rating on the shares.

The company's first-quarter results showed solid upside on both sales and earnings with a slight upward revision to full-year targets, the analyst tells investors in a research note.

The firm said Palantir's new-customer-acquisition momentum continued with record new additions, while commercial deal value growth was also quite healthy.

And D.A. Davidson raised the firm's price target on Palantir to $24 from $19 and kept a neutral rating on the shares.

The company reported a “solid” first quarter, highlighted by better-than-expected results and driven by an expanded operating profit margin and growth within U.S. commercial revenue.

Palantir is only beginning to leverage its AIP boot camps to help drive new and expanded current business, which the management believes will contribute significantly toward growth in commercial revenue, the firm added. The company runs the boot camps to show customers how to apply AI to their operations.

Stephen Guilfoyle's Palantir stock price target is $29.

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