On Wednesday, HSBC (LON:HSBA) revised its stance on Palantir Technologies Inc . (NYSE:PLTR), downgrading the stock from Buy to Hold while setting a price target of $22.00. The adjustment follows Palantir's recent guidance for 2024, which suggests a strategic emphasis on operating efficiency and revenue growth. This focus has been a significant factor behind the company's robust financial performance in 2023.
The firm acknowledges Palantir's advantageous position to leverage the robust demand for its artificial intelligence products. This is particularly true within the Commercial segment, which is experiencing rapid growth. Additionally, expectations are set for the Government segment to see renewed momentum due to the potential fulfillment of government contracts in the upcoming year and an uptick in defense spending.
Palantir's commercial operations in the United States have seen notable acceleration, driven by a strong market demand for the company's AI Platform. The firm's innovative marketing approach, which includes the introduction of short-term AI Platform (AIP) bootcamps, has been effective in securing new client acquisitions.
HSBC forecasts Palantir's revenue to increase at a compound annual growth rate (CAGR) of 20.2% from 2023 through 2028. This growth is anticipated as the company's anti-terrorism and defense products gain traction amidst global conflicts. Furthermore, the projection includes an improvement in non-GAAP operating margins by 14.15 percentage points, reaching 42.6% over the same period. Consequently, the non-GAAP earnings per share (EPS) is expected to grow at a CAGR of 24.2%.
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