Palantir Technologies (NYSE: PLTR) has surged by 16% on Friday as investors continue to rally behind the big data specialist. The company made headlines on Wallstreet as it completed its long awaited IPO on September 30th. The stock price staggered at $10 throughout October after its debut on the NYSE. However, recent coverage from analysts and earnings forecasts have bolstered the long term outlook for the company moving into 2021. This article will breakdown what analysts are saying about Palantir stock and what the forecasts are moving into 2021.
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What are analysts saying about Palantir stock?
According to CNN data, the average 12 month price target from 5 analysts suggests a median price of $11.00. The higher quartile suggests a price target of $13 a share and the lower end suggests a more conservative target at $10. Now its important to note these price targets were announced on the 26th/27th of October respectively. At that time, the stock was trading at $9.95 a share which suggested the company had a positive upside potential of 10%-30%. In the past week, the stock has surged past the higher end price targets, likely to hit $14 at market open Monday.
The institutions who have weighed in on Palantir include the likes of CitiGroup, Morgan Stanley, Credit Suisse Group and Goldman Sachs. Morgan Stanley listed an overweight rating and price target of $13, which represented 31% upside potential at the timing of the announcement. Three analysts have listed the company rating status as Hold while the other two main institutions have picked Palantir as a buy. With such momentum building behind Palantir, analysts will likely update their positions into early 2021. Upgrades from initial positions will likely be a catalyst for further stock price growth.
Why is Palantir stock currently surging?
The company surged by 16% on Friday on no news, suggesting investors are beginning to build momentum behind the big data tech. Firstly, the momentum generated has been a bi product of its potential for revenue growth moving into 2021. Morgan Stanley’s research led by Keith Wess noted that the shift to Software sales and Government opportunity are key drivers for stock growth. The company has expanded its customer base to serve local & federal governments and companies in the financial & healthcare sector.
The company is forecasted to hit $1.04 Billion in revenue for 2020. Forecasts predict a 32% increase in revenue for 2021, with $1.4 Billion in annual revenue. With earnings for Q3 to be released on November 12, the forecasts guidance remains very optimistic. The EPS for this quarter is forecasted to be $0.02 a share turning over $296 million.
Why Investors are treading with caution with big data companies
There is no doubt the Palantir movement is exciting for investors. However, it’s worthwhile noting the risks involved with all big data companies. As noted in our previous article on Palantirs IPO, the misuse of big data can be detrimental for shareholders and the general public. For example, the Cambridge Analytica scandal saw Facebook shares plummet, hence hurting positions of long term shareholders.
Secondly, the companies ties with Government agencies has sparked criticism from activists and the media. These factors are calculated into the risk when purchasing shares in a company that operates within the Big data sector or Government agencies.
“As our business has grown and as interest in Palantir and the technology industry overall has increased, we have attracted, and may continue to attract, significant attention from news and social media outlets, including unfavorable coverage and coverage that is not directly attributable to statements authorized by our leadership, that incorrectly reports on statements made by our leadership or employees and the nature of our work, perpetuates unfounded speculation about company involvements, or that is otherwise misleading.”Palantir response to public criticism TechCrunch.com – See full article here.
Before I begin, I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, the Palantir investor momentum looks to remain bullish for the time being. Although only initial coverage, analysts such as Morgan Stanley are confident the stock will continue to see growth in its sector. The risks associated with the Big data industry are prevalent as seen with Cambridge Analytica. Although without risk, there is no reward. The November 12th earnings will shed more light on further revenue guidance moving into 2021. Furthermore, we can expect analysts to provide further coverage moving into next year, which could see the stock really take off (opinion not advice – see full disclaimer below).
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.