New Palantir Price Target After Major Technical Development
An evolving technical picture has forced me to raise my target. Here's the 'critical' line to pay attention to and my updated key price levels.
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I discussed (updated) both Rocket Lab USA RKLB and SoFi Technologies SOFI fairly recently. Both are former "Stocks Under $10" portfolio holdings.
There had been no need to update what had been our most successful Stocks Under $10 holding, Palantir Technologies PLTR, for some time as the technical picture had not changed dramatically, though the stock had worked its way in onboard market weakness. Never mind that the company does not import anything. Never mind that CEO Alex Karp just keeps landing contract award after contract award.
The stock was and is expensive by historical fundamental metrics despite having one of the strongest balance sheets I have ever seen. Traders and investors needed to raise cash, and this was one spot where there were super-sized profits to be taken.
Well, Palantir's technical picture has evolved my friends.
Upcoming Earnings
There's still almost a month to go here. Palantir is expected to release its first-quarter financial results on or about May 6. Wall Street is looking for a GAAP EPS of $0.07, adjusted up to $0.13, on revenue of nearly $874 million. The company had projected sales of $860 million at the midpoint. That would be up from the year-ago EPS comparison of $0.08 on year-over-year revenue growth of more than 36%.
This would continue the acceleration of the Palantir's year-over-year sales growth in sequential order of 19.6%, 20.8%, 27.2% and 30% for the past four quarters. In addition, of the 11 sell-side analysts that I know cover the stock, all 11 have increased their estimates for Palantir since the start of the quarter.
The company also projected operating cash flow for the first quarter of $356 million at the midpoint. The size of the "beat," assuming there is one, for this metric could be crucial.
The Chart
Readers will see that Palantir stock broke out of a Falling Wedge pattern of bullish reversal on Wednesday. The stock also took back its 21-day exponential moving average (EMA), which probably brought some swing traders aboard.
The stock, which gained 19% on the day, was rejected at its own 50-day simple moving average (SMA), a line that would be critical in forcing portfolio managers to increase some of the long-side exposure that they had given up since the stock price apexed in mid-February.
Note that while PLTR stock has experienced some profit taking on Thursday, so far most of Wednesday's gains have held. It also looks as if that 21-day EMA may have shown up as support.
Relative strength has improved and the daily MACD (moving average convergence/divergence), while not yet bullishly postured, looks a lot less bearish as the 9-day EMA has moved back above the zero-bound. That 50-day line, as it had been at lower levels, is my upside pivot.
Palantir Technologies (PLTR)
Price Target: $116 (up from $110)
Pivot: 50-day SMA (currently $92.30)
Add: Down to $63 (January low)
Panic: Loss of 200-day SMA (currently $58.60).
At the time of publication, Guilfoyle was long PLTR, SOFI and RKLB equity.
