Sticking With This Palantir Price Target After $448 Million U.S. Military News
After news broke that the U.S. Navy is partnering with the AI firm, we're taking a closer look.
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The news broke on Tuesday night: The U.S. Navy has announced a partnership with "Stocks Under $10" holding and back-to-back Sarge "Stock of the Year" selection Palantir Technologies (PLTR) to deploy the firm's Foundry and Artificial Intelligence Platform (AIP) across the nation's Maritime Industrial Base, or "MIB," under a new initiative known as ShipOS.
Under this effort, $448 million has been authorized to accelerate the adoption of generative AI and autonomous technologies for industrial purposes.
The Navy will leverage Palantir's capabilities to modernize its shipbuilding programs. The Naval Sea Systems Command (NAVSEA) will aggregate data from resource planning systems, and legacy databases to identify bottlenecks in supply, streamline workflows, mitigate risk and provide a data-driven approach to production management.
The idea, in plain-speak, is to avoid unwelcome issues while enabling more informed decision making at a faster pace. Primarily, the Navy is trying to improve production timelines and control costs for both the Virginia- and Columbia-class submarine projects. The Virginia-class nuclear submarine has been in commission since 2004 and is a joint product of General Dynamics (GD) and Huntington Ingalls (HII) . The Columbia class nuclear submarine has been under construction since 2020 and is not likely to enter service prior to 2031. General Dynamics and Huntington Ingalls are also working on this project together.
Well Entrenched
This deal further expands Palantir's involvement with the U.S. armed forces. The firm already supplies the TITAN mobile intelligence platform to the U.S. Army. This system provides field grade and operational level commanders with actionable intelligence and accelerates the "sensor to shooter" timeline. Data is processed using high-altitude, aerial, terrestrial and extraterrestrial sources.
Palantir also provides the Maven Smart System to the U.S. Army, U.S. Marine Corps and NATO forces. Maven uses artificial intelligence, and machine learning to analyze data from drones and sensors to help automate targeting, logistics and identifying objects/forces of interest. The system also helps commanders predict troop size requirements, equipment needs and maintenance costs.
Palantir Pivot Triggered!
Readers will see some recent developments in the performance of PLTR since I wrote to you on December 1 (just nine days ago) and placed a new $215 target price on the stock. The shares were trading with a $166 handle at that time. They are trading with a $185 handle on Wednesday morning (+11%).
It's plain to see that the rising-wedge pattern of bearish reversal that broke in mid-November did force a sell-off. Support was found close to, but above, the stock's 20-day SMA. Two days later, the stock took back its 21-day EMA, re-engaging the swing crowd. Late last week, the stock took back its 50-day SMA (our pivot), which has acted as support since. This suggests that professional money bought into the move.
Relative strength has improved and is now better than neutral but nowhere near being in a technically overbought condition. The stock's daily MACD is also nowhere near as bearish as it was nine days ago. The histogram of the nine-day EMA has been in positive territory since December 3. In addition, the 12-day EMA has crossed above the 26-day EMA and will likely enter positive territory after the opening bell. These are bullish developments.
Target Price: $215 (reiteration)
Pivot: 50-day SMA (still $179)
Add: Close to the 200-day SMA (currently $143)
Panic: Loss of the 200-day SMA
At the time of publication, Guilfoyle was long PLTR equity.
