Government Surveillance Contractor Palantir's AI Tactics Under Microscope By Wall Street Analysts: Must 'Demonstrate' Growth To Justify Valuation

Chris Katje

May 07, 2024

Software and data analytics company Palantir Technologies (NYSE:PLTR) reported first-quarter financial results after market close Monday.

Analysts size up the first-quarter earnings beat and what's next for the company.

The Palantir Analysts: Goldman Sachs analyst Gabriela Borges has a Neutral rating and raised the price target from $13 to $14.

Mizuho analyst Gregg Moskowitz has a Neutral rating and $21 price target.

Related Link: Palantir Stock Is Falling Tuesday: What’s Going On?

Goldman Sachs on Palantir: The company's Bootcamp interactive workshop could be in the early stages of conversion, according to Borges.

"We believe investors will focus on the sustainability of US Commercial growth to underwrite whether Palantir can maintain or accelerate 20%+ total revenue growth over the medium term," Borges said.

The analyst said Palantir beat revenue estimates from analysts and raised its full-year revenue and operating income guidance.

"We continue to view Palantir as uniquely positioned to leverage its core data stitching competencies into enterprises that are looking to deploy AI use cases."

The analyst said over 915 organizations have participated in AI boot camps to date, with 136 deals closed in the first quarter.

"We look to gauge to what extent Palantir can consistently convert bootcamps into bookings and revenue as we believe this go to market is still in the early stages of being formalized."

Mizuho on Palantir: The company's artificial intelligence platform showed encouraging signs, Moskowitz said.

The analyst said the first-quarter financial report was solid with "healthy revenue upside."

"The rebound in Government was a pleasant surprise, although the Commercial beat coming entirely from strategic commercial contracts was not," Moskowitz said.

The analyst said the strong report and raised guidance "could help alleviate potential investor concerns."

"We believe PLTR needs to consistently demonstrate stronger execution and growth in order to justify a higher valuation."

The analyst said Palantir showed strong momentum for its AI Platform, with high demand coming from U.S. enterprises.

"Mgmt also reiterated that it is seeing exceptional interest in its AIP bootcamps, which are helping PLTR meaningfully compress sales cycles as new customers are landing and expanding at an accelerating rate."

The analyst's $21 price target is based on an enterprise value divided by sales multiple of 18.5x for 2024 estimates and 15.5x for 2025 estimates. Moskowitz said the premium multiple to other enterprise software companies is based on Palantir's "strong strategic positioning with large customers and the potential for accelerated growth in future years."

PLTR Price Action: Palantir shares are down 14% to $21.65 on Tuesday, versus a 52-week trading range of $8.66 to $27.50. Palantir shares are up 180% over the last year.

Read Next: Wedbush’s Dan Ives Smells ‘Golden Buying Opportunity’ In Palantir’s Pullback After Q1 Earnings As He Lauds ‘Jalen-Brunson-Like’ Performance

Photo: World Economic Forum on Flickr

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