Here’s Why Planet Labs (NYSE:PL) Stock Is Racing Ahead
Stock Analysis & Ideas

Here’s Why Planet Labs (NYSE:PL) Stock Is Racing Ahead

Story Highlights

Planet Labs delivered strong Q2 performance and raised its full-year revenue outlook, giving its shares a significant boost. 

Planet Labs (NYSE:PL) stock, which has traded mostly sideways throughout this year, is surging ahead during the pre-market session on Tuesday. Strong Q2 revenue growth and full-year guidance raise are behind the spike in PL stock. Further, strong margin expansion is a positive.

A Snapshot of Planet Labs’ Q2 Results and Fiscal 2023 Guidance

Planet Labs stock is up over 11% in the pre-market trading session. The company that provides daily data and insights about Earth has delivered 59% year-over-year growth in its top line in Q2.

Its CEO, Will Marshall, said, “Planet’s results for the second quarter exceeded expectations across the board and demonstrate the continued acceleration of our growth rate and robust demand for our unique Earth data solutions.”

Thanks to the strong demand, PL now expects to deliver revenues in the range of $182 million to $190 million, up from its earlier guidance of $177 million to $187 million.

In addition to its strong sales and outlook, Planet Labs’ gross margin and retention rate were also impressive. Its adjusted gross margin expanded 52% in Q2, compared to 36% in the prior-year period. Meanwhile, its net dollar retention rate stood at 125%. 

Is Planet Labs a Buy, Sell, or Hold?

PL stock has received three unanimous Buy recommendations for a Strong Buy consensus rating on TipRanks. Meanwhile, PL’s average price target of $9.67 implies 78.4% upside potential. 

However, with hedge funds selling 240.9K PL stock in the last three months and a negative signal from retail investors, Planet Labs has a Neutral Smart Score of five out of 10, implying it could perform in line with market expectations.  

Bottom Line

Strong revenue growth led by robust demand, its large customer base (855 at the end of Q2), strong margin expansion, and high recurring revenues provide Planet Labs with a solid platform for future growth.

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