Boosting the Leading Palantir Target Price as Firm Leaves Wall Street in Disbelief

You all know I loved to see the Palantir PLTR results last night. 

I was at my desk and started screaming like a school kid. Very un-military like. My wife ran into my office. She thought maybe I had a heart attack. I don't think she was hoping I had a heart attack. Palantir Technologies had gone to the tape with the firm's fourth quarter financial results. I wasn't watching any of the financial cable TV stations. I had that little "Fly Cast Audio" squawk guy on my computer. He spoke up, said "Palantir Technologies" and the rest was the stuff of gummy bears and candy canes. Just awesome. 

Most readers who have been with me for a while know that PLTR was a core holding of the old "Stocks Under $10" portfolio at the old "Real Money Pro" and that the portfolio had an entry point with a $6 handle. For the new kids, this stock has been both the greatest call and best investment of my many-decades career. At the last sale visible on my screen this morning, that trade for those that followed us in on that initiation and simply held the stock without making any changes are now looking at a 16-plus bagger. 

For those that were about to ask, yes, I took a little PLTR off on Tuesday morning. I am a professional after all. I did not touch my core position. I simply took off the portions that I bought on the DeepSeek-inspired weakness last Monday and earlier in January. In at an average of $70.52. Out at $102.45. That's a gain of 45.3% over a very short period of time. My longer-term core position run in percentage terms is beyond wild. The stock this morning is now up over 500% over 12 months.

Palantir CEO Alex Carp Is a Focused Genius

Some of the musings of Palantir CEO Alex Karp — who you all know I think is that once-in-a-very-blue-moon chief executive who combines the right mix of genius, intensity, focus and maybe even a little eccentricity. A perfect ingredient when it works and right now, it's working.

From the Palantir Shareholder Letter:

"The looks were only more puzzled, the brows more furrowed, when we made clear that we were intent on building software systems for U.S. defense and intelligence agencies. There were some challenging years. We were an odd bird flying in the wrong direction at the height of the consumer internet bubble. The embrace came only slowly at first, and then more recently, quite quickly. The unfortunate thing, either in business or politics, is that many of one’s adversaries and antagonists will never respond to anything but strength — that crude form of power that does not ask for, but which requires compliance and deference. And so strength we have built. "

From the Palantir Earnings Call:

"We at the end of the day at Palantir are exporting our culture and way of doing things to enterprises, especially in America, by allowing enterprises to capture their tribal knowledge in a way that they can utilize LLMs, i.e., take the commodity side of LLMs and hypercharge or specialize their secrets of their enterprise using the secrets of our enterprise, namely, how do you build product? How do you end up with ontology? How do you implement it?

"And last not least, we believe we are making America more lethal, making our adversaries increasingly afraid of acting against the interests of America and especially Americans and we are proud of our moral stance, and we are very long on the U.S. and what's happening and what will happen in the future."

The Palantir Quarter 

For the three-month period ended December 31, Palantir posted an adjusted EPS of $0.14 (GAAP EPS: $0.03) on revenue of $827.52 million. The adjusted top-line print and the sales number both handily beat Wall Street's expectations, while that sales print was good for year over year growth of 36%. 

During the quarter, U.S. commercial revenue increased 64% to $214 million, while U.S. government revenue increased 45% to $343 million. Palantir closed 129 $1 million deals, 58 $5 million deals and 32 $10 million deals. The firm closed $803 million (new record) worth of U.S. commercial total contract value (TCV), which was up 134% year over year and 170% sequentially. Customer count increased by 43% year over year and by 13% sequentially. 

Palantir Operations 

You already know that the firm generated revenue of $827.519 million (+36%) for the period covered. Out of that number, the cost of revenue came to $174.533 million (+61%), leaving a gross profit of $652.986 million (+30.7%) on a gross margin of 78.9% (down from 82.1%). GAAP operating expenses grew 47.9% to $641.943 million, leaving a GAAP operating income of $11.043 million (down from $65.794 million). Adjusted operating income printed at $372.522 million (+78%) after making adjustments for $281,798 million worth of stock-based compensation and $79.681 million worth of payroll taxes related to that compensation.

After accounting for interest, other income and expenses, and taxes, GAAP net income attributable to common shareholders hit the tape at $79.009 million (down from $96.913 million), which works out to a GAAP EPS of $0.03, down from the year-ago comparison of $0.04. Once adjusted for the above-mentioned items. net income attributable to shareholders landed at $341.947 million (+80.3%). This works out to an adjusted EPS of $0.14 versus the year-ago comp of $0.08.

Palantir Stock Fundamentals 

For the quarter, Palantir generated operating cash flow of $460.327 million (+52.8%). Out of this number came just $3.106 million in capex spending, while added to this number was $60.164 million worth of cash paid for employer taxes related to that beefy print for stock-based compensation. This resulted in free cash flow of $517.385 million (+69.8%). The firm does not return capital to shareholders. 

Turning to the balance sheet, Palantir ended the quarter and year with a cash position of $5.23 billion and current assets of $5.934 billion. Current liabilities added up to $996 million, which included $265.3 million in deferred revenue which is not a true financial obligation and no short-term debt. This leaves the firm with a robust headline current ratio of 5.96. Once adjusted for those deferred revenues, that current ratio rises to an incredible 8.12. 

Total assets amount to $6.341 billion. This includes absolutely no goodwill or any other intangibles. Total liabilities less equity comes to $1.246 billion. This does include some more deferred revenues, and of course, no long-term debt. Palantir still has absolutely zero debt on the books and still has one of the strongest balance sheets I have ever seen for a firm this size. 

Palantir Guidance 

For the current quarter, the firm is projecting revenue of $858 million to $862 million, which is well above the consensus view of $799 million. At the midpoint, that would be good for year-over-year growth of 35.6%. The firm also sees an adjusted operating income of $354 million to $358 million. 

For the full fiscal year, Palantir is projecting revenue generation of $3.741 billion to $3.757 billion, which is again, well above the Wall Street view of about $3.53 billion. U.S. commercial revenue is expected to grow at least 54%. while adjusted operating income is seen at $1.551 billion to $1.567 billion and free cash flow is seen at $1.5 billion to $1.7 billion. 

In addition, Palantir expects to post positive GAAP operating and GAAP net income for each quarter of the new year.

Wall Street on Palantir

Since these earnings were released on Monday night, I have come across nine highly-rated (four-plus stars at TipRanks) sell-side analysts that have opined on Palantir. Most of them still do not love the stock but have begrudgingly increased their target prices quite substantially. Some folks never learn. Among the nine, we have two "buy" or buy-equivalent ratings, five "hold" or hold-equivalent ratings and two outright "sell" or sell-equivalent ratings. 

After allowing for changes, the average target price across the nine is $92.44, with a high of $125 (Mariana Perez Mora of Bank of America) and a low of $42 (Tyler Radke of Citigroup). After omitting those two as possible outliers, the average target price across the other seven rises to an even $95. 

Broken out by ratings category, the average buy target is $122.50, the average hold target is $89.40 and the average sell target is $70. 

My Take on Palantir Stock

Well, coming into earnings, I had a Wall Street high target price of $90. Dan Ives of Wedbush had equaled that target several weeks later, but that was the high target. As one can see above, a whole lot of folks with a whole lot of egg on their faces have increased their targets without changing their ratings. 

Palantir is not just a growth stock, it's one of the few "growth" stocks in late 2024/early 2025 that is truly experiencing an acceleration in the firm's rate of sales growth. Cash flows are not just positive but growing. The balance sheet is just beyond simply being fortress-like. Oh, and the business is still attracting both new customers and increased business with old customers. All while serving the defense and intelligence needs of the United States with a highly-tuned focus.

Obviously, the $82 pivot created by the cup-with-handle formation has been triggered. This occurs with an overtly bullish looking daily MACD and an reading for relative strength that is just exploding to what might be seen as technically overbought levels. That does not mean that these gains cannot be held. It may mean that with that big unfilled gap between Monday and Tuesday on the charts, that there may have to be a basing period of consolidation. 

The trick now is finding out if support can be found above the upper trendline of the long-term trend represented here by my regression model. That would be a moving target of about $96 right now and until a new discernible pattern develops, could serve as my new pivot. Then again, Tuesday morning's high may have to serve that purpose for now.

Palantir Technologies (PLTR) Target Price

Target Price: $133 (up from $90)

Temporary Pivot: Tuesday's high (to be determined)

Add: Down to the gap fill ($84)

Panic: Loss of the 50-day SMA (currently: $74)

At the time of publication, Guilfoyle was long PLTR equity.