Palantir Technologies (NYSE: PLTR) first caught investors attention in the last quarter of 2020 as the companies stock rose 165%. However, the companies stock has taken a beating over the past 6 months, losing 60% in value. For readers unaware, Palantir specialises in big data analytics, in particular within the realm of law enforcement and surveillance.
Since listing, Palantir has announced numerous large scale Government and Corporate partnerships. This includes its partnership with tech giant IBM on artificial-intelligence applications and its recent $111 million contract to provide mission command platform for the US Special Operations Command. More recently, the US Army selected Palantir for Intelligence Data Fabric and Analytics Solution.
Palantir boasts a particularly impressive pipeline of contracts, however investors have raised concerns surrounding its revenue dependance on Government agencies. To top this off, the current tech market has been unforgiving, discounting tech stocks to their pre-covid valuations. In this article, we will breakdown everything investors need to know about the PLTR Stock Forecast.
Palantir Stock Falls after Q4 results, Here’s Why.
The companies Q4 results were met with a swit sell off as investors raised concerns about slowing growth in 2022. Overall, Palantir’s results met revenue expectations, actually beating the streets targets by 3.5%. However, the companies net loss widened to $156.19 million which impacted the bottom line EPS.
The strong market reaction is not a shock, as even the strongest Q4 results in the tech sector have been met with investor pessism. In comparing our previous articles on Palantir, internally not a lot have fundamentally changed since the company was trading at its 52 week highs.
In the Q4 announcement, the CEO reaffirmed the companies long term goal of Annual revenue growth of 30% or greater through 2025. Deutsche Bank analyst Brad Zelnick commented on Palantir’s Q4 results, noting that they were “fine” on the surface and in some ways better than expected.
On the contrary, Zelnick alongside other Wallstreet analysts still have questions around underlying organic trends and plans for aggressive investment to sustain its 30% annual revenue growth.
Jeffries analyst confident in $4 Billion revenue over next 3 years
Across the board of Wallstreet analysts, Palantir has received a mixed level of Bullish and Bearish valuations. One of the more bullish is Jeffries analyst Brent Thill, who has a $21 target on the stock. Thill is confident in the long term outlook on Palantir, expecting the company to generate $4 Billion over the next 3 years. The firms PLTR stock forecast represents a 100% upside from the current trading price.
”We believe that PLTR’s commercial initiatives aim to bring its platform to the mass market and that this will take years (not quarters) to execute.”Jefferies analyst Brent Thill in a recent statement
Morgan Stanley cautious on long term growth prospects
Morgan Stanley analyst Keith Weiss has taken a more conservative approach rating questions about Palantir’s growth durability. The analyst did highlight Palantir has an improving commercial business with accelerating revenue growth.
The concern surrounding Palantir’s division of sales has been ongoing, with investors concerned that the company has heavily relied upon Government contracts as apposed to commercial. Weiss highlighted some important questions surrounding the companies ability to sustain a 30% CAGR with the companies strategic investments heavily driving current growth.
It is clear that analysts such as Morgan Stanley are practising some caution on Palantir’s current valuation despite an improving commercial business.
PLTR Stock Forecast: Recent wins for Palantir’s revenue prospects
The strong revenue guidance is mainly driven by the impressive growth in deals announced in recent quarters. These contracts include the U.S. Army (Project Vantage $114 million USD) and US$300 million renewal with their aerospace customer. More recently, the US Army selected Palantir for Intelligence Data Fabric and Analytics Solution contract. Palantir will deploy the Palantir Gotham Platform to support Army Intelligence spanning across multiple security classifications.
Furthermore, COVID-19 has had a positive impact on Palantir’s 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 Palantir’s clients who are looking to simplify the way they operate.
The risks involved for Big Data investors
To begin with, 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.
The Bottom Line – PLTR Stock Forecast
In conclusion, revenue projections and operational growth holds arguments for the bulls and the bears. It is clear the PLTR Stock Forecast and outlook currently lacks investor confidence, but the systematic market factors are definitely at play. While the growth concern questions from investors and analysts alike are valid, fundamentally the long term goals from Palantir remain unchanged.
Furthermore, with the threat of cyber attacks looming in 2022 – companies such as Palantir will likely benefit from increased Government and Corporate spending on Data security and software.
Do you think investors have overreacted or are internal growth mechanisms a ticking time bomb? Let us know in the comment section below.
Written by Tyger Fitzpatrick and research completed by Zac Lorschy.
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The information above is presented as factual information and is not financial advice nor does it constitute a recommendation. 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.
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