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Valued at a market cap of $48.6 billion, Palantir (PLTR) stock has delivered spectacular returns in recent months, and is up more than 184% in the last year. Despite its outsized gains, the tech stock trades 44% below all-time highs, and analysts remain largely skeptical ahead of its upcoming earnings report.
After its February earnings report, the stock spiked 30% in a single session after reporting in-line earnings, and slightly higher-than-forecast revenue. With the government contractor set to report its March quarter results after the close next Monday, May 6, let’s see if Palantir stock is worth holding in your equity portfolio right now.
An Overview of Palantir
Palantir is an enterprise-facing company that builds and deploys software platforms to assist clients in counterterrorism investigations and related operations in the U.S. and globally. Its flagship platform is Palantir Gotham, which allows users to identify patterns hidden within huge datasets, helping them plan and execute responses to associated threats.
Palantir Foundry is a commercial-based platform that enables companies to create a central operating system for users to integrate and analyze data in a single place. It recently unveiled the Palantir AIP, or artificial intelligence platform, which provides access to commercial large language models as it aims to gain traction in the artificial intelligence (AI) segment.
Will Palantir Beat Estimates in Q1 of 2024?
Palantir stock surged 30.8% on Feb. 6 after the company beat Wall Street revenue estimates for Q4 of 2023. In the December quarter, Palantir reported revenue of $608.4 million and adjusted earnings of $0.08 per share, against consensus estimates of $602.4 million and $0.08. In the year-ago period, Palantir reported revenue of $508.6 million, indicating it grew the top line by 20% year over year.
The company reported a profit of $93 million in Q4 of 2023, its fifth consecutive profitable quarter, and is eligible to be included in the S&P 500 Index ($SPX).
During its Q4 earnings, Palantir forecast sales between $612 million and $616 million in the March quarter. It also estimated 2024 sales between $2.65 billion and $2.67 billion, and expects to report free cash flow between $800 million and $1 billion this year, providing the company with enough room to target accretive acquisitions and invest heavily in organic growth.
Wall Street expects Q1 sales at $625.33 million with adjusted earnings of $0.08 per share. Moreover, analysts expect the company to end 2024 with sales of $2.71 billion and earnings of $0.33 per share.
What's Next for Palantir Stock?
While Palantir previously worked extensively with government agencies, it grew commercial sales by 70% in Q4. It ended 2023 with 221 commercial customers, up from 143 customers in 2022, indicating a 55% growth rate. Palantir expects U.S. commercial revenue to exceed $640 million in 2024, representing a 40% growth rate from 2023.
The company’s Q4 results reflect the strength of its software portfolio and the surging demand it is experiencing across sectors and industries for its AIP, which is capable of integrating with existing infrastructure.
In its shareholder letter, Palantir explained, “The demand for large language models from commercial institutions in the United States continues to be unrelenting. Every part of our organization is focused on the rollout of our Artificial Intelligence Platform (AIP), which has gone from a prototype to a product in months.”
What is the Target Price for PLTR Stock?
Out of the 14 analysts covering PLTR stock, two recommend “strong buy,” one recommends “moderate buy,” six recommend “hold,” one recommends “moderate sell,” and four recommend “strong sell.”
The mean target price for PLTR stock is $20.69, which is 6.5% below Wednesday's closing price. Given the low expectations surrounding the stock, PLTR can likely once again skyrocket if it beats estimates in Q1 of 2024.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
