Palantir Technologies Inc.

PLTR Details

Palantir Technologies Inc (NYSE: PLTR) develops software that allows organisations to integrate large amounts of data, decisions, and procedures. The business is divided into two segments: commercial and government. The Commercial division serves customers in non-government industries. Both federal and non-federal government agencies in the United States are customers in the Government segment.

Latest News:

• Recent Commercial Contract: On May 4, 2022, The Department of Health and Human Services (HHS) selected PLTR for a 5-year "Solutioning with Holistic Analytics Restructured for the Enterprise Blanket Purchase Agreement. . The Palantir platform will be available to HHS officials throughout the department's many agencies and missions thanks to this USD 90 million BPA. Palantir's built-in data security features, innovative technologies, and common security architecture were deemed well-suited to meet crucial technology demands throughout HHS.
• Palantir and Trafigura Collaboration: On May 24, 2022, Trafigura Pte Ltd one of the world’s largest physical commodity trading companies, and Palantir Technologies Inc. today announced the development of a technology services platform for carbon emissions calculation, reporting and collaboration across commodity supply chains. This project marks the first time Palantir will go to market with a partner on carbon emissions tracking.

Q1FY22 Results:

• Solid Topline Performance: The company reported revenue growth of 31% on YoY to USD 446 million, driven by 54% surge in the commercial revenue, and 16% surge in government revenue.
• Decrease in Net Losses: PLTR witnessed and decline in net losses to USD 101.38 million in Q1FY22 vs. USD 123.47 million in Q1FY21, driven by solid jump in revenue.
• Healthy Balance Sheet: As of March 31, 2022, the company had a cash balance of USD 2.33 billion with no outstanding debt.

Key Risk:

The company is exposed to weakness in the broader economic activities, a big economic slowdown could hurt government and commercial spending. Also, from the technical standpoint, PLTR’s stocks is hovering in a long-term bearish zone, as it traded below its crucial long-term as well as short-term support levels, recovery in the stock could be little slow, if weakness in broader markets continues.

Outlook:

Guidance (Earnings Presentation: Q1FY22, May 09, 2022)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

PLTR’s stock got hammered to an all-time low of USD 6.44 recently following its first quarter 2022 earnings announcement. However, this implies that many positive developments got overlooked. The company is one of the top companies within the industry it operates and offers excellent growth prospects with substantial profitability potential. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 9.91.

We continue to believe that the market currently underestimates Palantir’s ability to expand its business in the following quarters, which is why it’s key reasons why its stock had free fall recently. We continue to believe that Palantir has a bright future.

Considering the significant correction in the stock price, debt-free balance sheet, strong liquidity, recent commercial contract, current valuation, and associated risks. We recommend a "Speculative Buy" rating on the stock at the closing price of USD 7.54, down 5.8% as of May 24, 2022, at 09:40 AM PDT.

1-Year Technical Price Chart (as on May 24, 2022, at 09:40 AM PDT). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.