Palantir Technologies, Inc. PLTR reported fourth-quarter revenue that surpassed forecasts and bottom-line results in line with expectations, marking the fourth consecutive quarter of GAAP profitability. A bullish analyst raised the price target for the stock.
“The Messi of AI Delivers in World Cup Fashion,” he said.
The Palantir Analyst: Wedbush’s Daniel Ives maintained an Outperform rating and raised the price target from $25 to $30, a 20% upward adjustment, suggesting scope for 79.43% upside potential.
The Palantir Thesis: The price target revision is due to the “off-the-charts commercial success Palantir is finding with AIP out of the gates,” said Ives in a note.
“A handful of times every decade there are tech companies that are so ahead of the competition and in a sweet spot of the future growth…yet the Street at the time dismisses it by dusting off their long-term stubborn bear thesis,” Ives said. On Monday, Palantir went from an “off-Broadway play” to a “primetime Broadway theater right off of Times Square under the bright lights,” he added.
The analyst noted that Palantir’s commercial business grew at an “eye-popping” 70% in the fourth quarter and the commercial customer count grew 44%, thanks to the artificial intelligence revolution driving AIP deal flow.
“It’s clear that as AI use cases explode enterprise CIOs are looking towards [Alex] Karp & Co. as the AI golden child for a platform to build out AI frameworks for the future,” the analyst said.
While shrugging off the choppiness in the Government business segment, Ives said the “story, growth, and ultimate re-rating is around Palantir’s U.S. commercial business which is estimated to show growth of at least 40% in 2024.”
Due to the strength in the commercial business, the analyst said free cash flow could approach $1 billion in 2024. He also sees an S&P 500 inclusion on the near-term horizon.
“In a nutshell, PLTR remains an undiscovered gem and a core part of our thesis in the AI Revolution just now taking shape across the tech world,” said Ives.
Price Action: In premarket, the stock climbed 17.46% to $19.64, according to Benzinga Pro data.
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