Palantir Technologies (NYSE: PLTR) has seen an incredible debut on Wallstreet. The stock has climbed 194% over the past month of trading, far exceeding analysts expectations. Palantir specialises in big data analytics, in particular within the realm of law enforcement and surveillance. Last month, Palantir announced it was chosen by the US Army to receive one of two prototype contracts for the Common Data Fabric and Data Security solution. This is off the back of 15 sizeable deals struck with commercial customers, all with paper value of $5 million or more. With such strong growth to close off the fiscal year, this article will breakdown everything you need to know about Palantir stock forecasts for 2021.
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What are analysts forecasting for Palantir stock over the next year?
After the IPO, coverage on Palantir stock has seen analysts underestimate the companies sharp price growth. The current 12 month price targets from analysts suggest an average target of $16.29 a share. This suggests a downside of 35% at Palantir’s current trading price. Here are the most recent price targets for Palantir stock for this month:
1/11/2021 Jefferies Financial Group – Upgraded the 12-month price target from $18 to $30. This had a strong impact on bullish investor sentiment.
12/18/2020 Credit Suisse Group – Boosted the 12-month price target from $13 to $17, changing the rating from Neutral to Underperform.
12/2/2020 Morgan Stanley – Analysts maintained the 12-month price target at $17 a share, however downgrading their rating from Equal weight to Underweight. The downgrade had a slight effect on investor sentiment.
11/13/2020 Royal Bank of Canada – analysts increased the 12 month price target from $11 to $15 a share. The price target boost came after continued investor support after the IPO.
What this means for Palantir investors?
It is clear analysts are remaining conservative/bearish on 12 month price predictions. However, we are likely to see initial coverage from larger institutions throughout 2021. This is becoming more likely with growing activity from both retail and institutional investors.
Palantir Revenue forecasts for 2021
Palantir released positive Q3 earnings results, shedding light on improved guidance for Q4 2020 and beyond. The company improved its forecasted revenue to reach $1.07 Billion for 2020. This is a 44% increase in revenue year on year. Analysts are predicting a 32% increase in revenue for the fiscal year of 2021, with an estimated $1.4 Billion in revenue. The steep but steady growth in revenue is a green light for longer term shareholders.
The strong revenue guidance is mainly driven by the impressive growth in deals announced this quarter. These contracts include the U.S. Army (USD $91 million), National Institutes of Health (USD $36 million), and USD $300 million renewal with their aerospace customer. Further, COVID has had a positive impact on Palantirs demand from cliental. Businesses have been transforming the way they operate to stay afloat in the dynamic business environment. For example, Enterprise resource planning are one of Palantirs clients who are looking to simplify the way they operate.
The risks involved for Big Data investors
The risk reward factor continues to play a key role in how investors behave in modern day investing. The risks involved with the Big Data industry revolves around the ethical use of Big Data. 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. In addition, the added volume of speculative activity on PLTR stock, we can expect the stock to remain volatile over the next 12-18 month (opinion not advice).
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 discussed 12 month analyst forecasts, revenue projections and operational growth holds arguments for the bulls and the bears. However, its worth noting Palantir are on track to reach an operating profit in 2021, as well as turn another 30% YOY gain in fiscal revenue. The risks associated with Palantir, both on an industry level and a corporate level remain high. Big Data remains a topic at large and will continue to spur up conversations regarding the misuse of it.
Written by Tyger Fitzpatrick and research completed by Zac Lorschy.
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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.