Palantir Projected for 'Beat and Raise' With Potential Record Defense Deal News
Here's how to trade the AI darling going into earnings.
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Long-time Sarge fave and core "Stocks Under $10" holding Palantir Technologies PLTR is set to report the firm's second quarter financial results this coming Monday, August 4, after the closing bell. Bear in mind, as far as I know, TheStreet Pro's "Stocks Under $10" is the only professionally run service or publication where PLTR is up more than 2,300% since having initiated the stock.
Current consensus view for the quarter is for an adjusted EPS of $0.14 on revenue of $939.5 million. Results like this would compare well to the year-ago comp of $0.09, while reflecting year-over-year sales growth of about 38.5%. This would be the fourth consecutive quarter for the firm of at least 30% sales growth and would be in line with the 39.3% growth displayed for Q1. Of the 20 analysts I can find who cover Palantir, 12 have increased their earnings estimates for the quarter since the quarter began, while three have revised those estimates lower. Five have not revised their estimates.
Most recently, on Wednesday, Mark Schappel of Loop Capital Markets, who is rated at five stars out of five by TipRanks, reiterated his "buy" rating on Palantir, while increasing his target price to $178 from $155. This is the closest, as far as I can tell, to any other professional approaching our still "street-high" target price of $181. Schappel wrote on Wednesday that he expects the firm to deliver yet another beat and raise on Monday. Just a week ago, last Friday, Brent Bracelin of Piper Sandler (three stars at TipRanks) initiated Palantir with a "Overweight" (buy-equivalent) rating and a target price of $170.
Today's News
Late on Thursday, the U.S. Army published a press release announcing that the Army had awarded Palantir Technologies "a new Enterprise Agreement that establishes a comprehensive framework for the Army's future software and data needs." The Army consolidated 75 contracts, of which 15 are prime contracts and 60 are related contracts into one single contract. The idea is to accelerate the delivery and availability of proven commercial software to soldiers while removing re-seller pass-through fees.
The contract establishes volume-based discounts to the Army for a period of up to 10 years. Throughout that period, the Army and other Department of Defense clients will have the option to purchase Palantir's commercial products up to a cap of $10 billion in value. While that is a cap and not a minimum, the award stands as potentially one of the largest ever made by the Department of Defense and is the largest contract ever won by Palantir.
On The Contract
Wedbush analyst Dan Ives (five stars) reiterated his "Outperform" (buy-equivalent) rating and his $160 target price on Palantir on Friday morning. The Ives team at Wedbush wrote, "We believe this deal represents an additional tailwind for PLTR with AI initiatives across the U.S. government accelerating with AI a strategic focus on the federal front and Palantir in the sweet spot to benefit from a tidal wave of federal spending on AI."
The Ives team mentioned that they continue to believe that Palantir’s unique software approach to artificial intelligence will be a positive growth catalyst as governments (not just the U.S.) look to further increase efficiency with more efficient software and reduced headcount. This sets up the firm to gather more awards across the federal government with its software value proposition playing perfectly into the broader federal efficient government theme.
Finally, the note added, "Palantir remains one of our top tech names to own in 2025 and this deal represents another opportunity for PLTR to capitalize on while continuing to generate unprecedented traction for its entire portfolio across the federal and commercial landscapes."
Trading Palantir into Earnings
Readers will see that traders tried to take some profits in PLTR this week and even on Friday morning. Consistently, the stock has found support at its 21-day EMA. I wanted to add to my position at that level on Friday morning, but knew I was going to write this piece, and it would be at least unethical to front-run my own article, especially knowing that I can sometimes impact the stock with my opinion. Therefore, I had to pass on a purchase with a $151 handle. Should the opportunity arise on Friday afternoon, after publication, I won't swing and miss.
Relative strength remains quite robust but is not in a technically overbought state. The daily MACD has gotten about as neutral as possible ahead of the numbers. The histogram of the nine-day EMA is sitting precisely on the zero-bound as the 12-day and 26-day EMAs sun side by side. That's neither bullish nor bearish. That said, options markets are now pricing in roughly a 50% probability for move of greater than $11 in response to those earning on Monday night. That's about $17 in either direction for the mathematically challenged.
Just an idea for a bullish trader not afraid to take on some increased risk at a discount: A trader could write $145 puts expiring next Friday for a cool $4.35. The stock goes up next week or at least doesn't fall to $145, that premium goes in the pocket. Just in case the trader does get run over, one option would be to purchase a like amount of $135 puts for about $2.05. That cuts the net premium paid to about $2.30 but also removes the risk of catastrophic loss.
Palantir Technologies (PLTR)
Target Price: $181 (Reiteration, still the highest on Wall Street)
Pivot: $160 (recent high)
Add: From 21-day EMA (currently $151) down to 50-day SMA (currently $140)
Panic: Loss of 200-day SMA (currently $97)
At the time of publication, Guilfoyle was long PLTR equity.
