Text size
Palantir CEO Alex Karp has said the company is set to become eligible for inclusion in the S&P 500 later this year after a streak of profitable quarters.
Ludovic Marin/AFP via Getty Images
Palantir
Technologies has taken investors on a wild ride but bulls look to have the upper hand for now. The data-analytics software company is still just about doing enough to keep investors hyped for its ambitions with artificial intelligence
Palantir
’s
(ticker: PLTR) boosted guidance initially looked like it wouldn’t be enough to keep the stock’s stunning year to date rally going. Shares sank as much as 10% in after-hours trading on Monday but then rebounded to erase those losses.
Palantir stock was up 0.1% in premarket trading on Tuesday at $18.00. The shares have nearly tripled in value this year so far through to Monday’s close.
For the bulls, Palantir is just about to hit an inflection point with the introduction of its Artificial Intelligence Platform, or AIP. The company’s executives said on an earnings call that since the launch of the AIP ten weeks ago, there had been AIP “unprecedented” interest from customers.
Palantir also said in the second quarter that its number of customers rose 38% from the prior year, as it looks to increase its revenue coming from commercial clients compared with government contracts.
“We continue to believe Palantir is the gold standard in AI and are confident in the company’s efforts to expand into the commercial space while maintaining its massive government presence,” Wedbush’s Daniel Ives wrote.
Ives maintained an Outperform rating and a $25 price target on the stock.
However, for the bears, Palantir’s second-quarter revenue growth of 13% from a year earlier might not look that impressive for a company which is trading at 81 times its expected earnings this year, according to FactSet.
“We believe the company still has significant work to translate AI demand to growth acceleration,” D.A. Davidson’s Gil Luria wrote.
Luria noted Palantir only raised its full-year revenue guidance by $2 million and its remaining performance obligations –contracted revenue which hasn’t yet been recognized– was down 20% from the same period a year earlier.
Luria raised his target price on the stock to $15 from $8.50 but kept a Neutral rating. He said the new target represented an enterprise value-to-revenue multiple of around 13 times for the current year, in line with high-growth profitable peers.
Write to Adam Clark at adam.clark@barrons.com
