Palantir Gets Top Price Target Boost as Wall Street Champions Stock
A leading Wall Street analyst has joined our leading price target for the AI-focused software firm.
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In December 2023, I gave readers Palantir Technologies PLTR as my top stock pick for 2024.
The stock ran 340% in 2024. Huzzah. I have produced both incredible winners and embarrassing mistakes when making public my "stock of the year" selections ahead of said year, and unlike most pundits, I do have skin in the game and I do follow up on my selections, win or lose. I did something that I had never done before this year.
In late December 2024, I selected Palantir as my stock pick again for 2025. I had never selected any stock two years back-to-back and to be honest, this was the first time I had ever selected a stock that I had already selected once, regardless of whether or not those two years were in a row.
On Wednesday, Palantir closed up 1.64% year (or month) to date after having swooned into mid-January and then posting six green-candle sessions consecutively. That's better than a sharp stick in the eye, but to be honest, this is also underperforming both the S&P 500 and Nasdaq Composite. Those two indices closed Wednesday up 3.48% and 3.62% year/month to date, respectively.
The Latest Palantir News
There's news on Thursday. I mean there's news most days in Palantir, such as last week's dance with Lockheed Martin LMT on the investment in drone-maker Shield AI and the consortium formed with Anduril, a startup that makes autonomous systems and weapons for the U.S. military.
Thursday morning's news came from a likely and friendly source. I am not talking about Voyager Technologies having filed for an initial public offering on Wednesday night, either. Palantir has a strategic partnership in place with Voyager, which is a defense and space exploration firm.
Instead, I speak of Wedbush analyst, the four-star rated (by TipRanks) and closely-followed, Dan Ives. Ives reiterated his "Buy" rating on the shares while increasing his target price from $75 to $90, matching our target price as now the co-Wall Street high. We have had $90 in place for months, but we're always glad to have other pros catch up.
Ives noted that, for Palantir's AI platform (AIP), there is a significant opportunity in both commercial and government markets for what he terms as "substantial revenue growth potential."
The company’s ability to deliver AI-driven solutions across any number of industries has not been fully valued by the marketplace, resulting in an underestimated revenue stream. Additionally, Palantir’s engagement with the U.S. government, especially in light of increased federal investments in all-things AI, positions the firm quite well to benefit from government spending initiatives focused on now highly publicized AI infrastructure development.
Earnings
Palantir is not expected to report the firm's fourth quarter financial results until after the closing bell on Monday, February 3. Currently, Wall Street is looking for an adjusted EPS of $0.11 on revenue of about $777 million. If these numbers are realized, they would be good for earnings growth of 37.5% on revenue growth of 28%. Since the start of the quarter all 13 top-ranked analysts that cover the name that I can find have revised their estimates higher.
For the fiscal full year of 2025, Wall Street is looking for an adjusted EPS of $0.48, which if the already mentioned fourth quarter of 2024 lands upon consensus would be good for growth of 26%. Wall Street is also looking for full year fiscal 25 revenue of $3.49 billion, which would amount to growth of close to 25%. Again, that's if Q4 F24 expectations are precisely accurate.
Palantir Stock Fundamentals
There's no need to go into the fundamentals. They won't change until this next earnings report has been released.
Readers already know that, as of the September quarter, operating and free cash flow have been positive and have been gaining upward momentum. Readers also know that there is no debt on the books and that I have long believed that this firm has one of the strongest balance sheets anywhere in corporate America, especially for the firm's size. Palantir is a beast.
The Chart
Readers also know that I had warned earlier in January that the technicals were lining up in what looked like a bearish set up and that I used that dip to increase my position size. The heck with net basis. If I ever add to my long position below my net basis for this stock again, I'll be working in a hardware store or something, but I won't be investing and trading for a living. That's for sure.
Just look at that Raff regression model and look at how PLTR responded to the test of its 50-day SMA. That's what happens when portfolio managers defend a stock, gang. Rock and roll.
Now, we have improving relative strength, a daily MACD that suddenly looks more bullish across all three components and a stock that now has the support of the swing crowd by virtue of the 21-day EMA as well as professional money managers.
Potential Price Target Boost for Palantir Technologies
I could increase my target price just a little, so that I'll still have the high target price on Wall Street, but the stock still needs to tack on 15% from here, so that would be a little premature. I will say this, the upper trendline of our model is currently running at $90 and will be higher once the stock gets there.
The $90 level may end up being more of a pivot than a target and that will set up a much higher target price. Perhaps something in the $108 to $112 range, but to quote the ending of the movie "Gladiator," "...but not yet... not yet." Currently, I view the area between the 21-day and 50-day lines as a spot to add.
At the time of publication, Guilfoyle was long PLTR and LMT equity.
