Northland has initiated coverage on Palantir Technologies Inc . (NYSE: NYSE:PLTR) with a Market Perform rating and a price target of $35.00. The firm highlighted Palantir's AI operating system, which is enhanced by their Ontology software, as a key driver in overcoming obstacles to AI adoption within enterprises.
Palantir's technology not only facilitates the creation of insights but also automates decision-making processes, which Northland views as the next evolution in AI.
The coverage emphasizes Palantir's role in the expanding enterprise AI market. The company's enterprise segment is experiencing growth, contributing to the momentum of the overall business, which is roughly half derived from government contracts.
Northland forecasts that Palantir will achieve a score of 59 on the 'rule of 40' metric in FY24, and 57 in FY25. This performance metric is considered top-tier and suggests that Palantir could command a 22x revenue multiple within a year, justifying the $35 price target.
Northland's valuation is supported by a Discounted Cash Flow (DCF) model, which aligns with the $35 target. The firm's stance on Palantir is to buy on dips.
In other recent news, Palantir has been making significant strides in its financial performance and strategic partnerships. The company's second-quarter fiscal year 2024 earnings reported total revenue of $678.1 million, a 27% year-over-year increase. Palantir has also raised its full-year revenue guidance to $2.746 billion, showcasing strong growth.
Analysts have been adjusting their outlooks on the company accordingly. Citi has increased its price target for Palantir to $30, citing the company's robust second fiscal quarter performance. BofA Securities also raised the company's price target to $30, noting Palantir's resilience and growth potential in the artificial intelligence market.
However, William Blair maintained an Underperform rating, anticipating a potential decline of over 20% in Palantir shares over the next year. Conversely, investment firm Wedbush has shown confidence in Palantir's growth trajectory, raising its price target on the company's shares to $38.
In terms of strategic partnerships, Palantir has announced a collaboration with Wendy’s Quality Supply Chain Co-op, Inc. (QSCC) to enhance QSCC’s digital capabilities and integrate artificial intelligence into its operations. This partnership aims to optimize supply chain management and reduce waste.
InvestingPro Insights
Palantir Technologies Inc. (NYSE:PLTR) stands as a prominent player in the AI industry, and recent coverage has placed a spotlight on its potential. To add further context, InvestingPro data and tips provide a deeper dive into the company's financial health and market performance.
InvestingPro data reveals a robust gross profit margin of 81.39% for the last twelve months as of Q2 2024, underlining the company's efficiency in generating earnings relative to its revenue. With a market capitalization of $72.87 billion, Palantir's size in the market is substantial. The revenue growth for the same period stands at an impressive 21.22%, indicating a strong upward trajectory in the company's earnings.
Two InvestingPro Tips particularly stand out for Palantir:
1. The company holds more cash than debt on its balance sheet, which provides financial stability and flexibility.
2. Analysts have revised their earnings upwards for the upcoming period, with 11 analysts signaling optimism about Palantir's financial performance.
These tips and data points highlight Palantir's solid financial foundation and the positive outlook among analysts, which could be of interest to investors considering the company's AI solutions and its potential for growth in the enterprise AI market. For those looking for more detailed analyses, InvestingPro offers additional tips at https://www.investing.com/pro/PLTR.
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