tiprankstipranks
Palantir Stock: Getting Cheap versus Its Growth
Stock Analysis & Ideas

Palantir Stock: Getting Cheap versus Its Growth

Secretive big-data software company Palantir (PLTR) is a WallStreetBets favorite that’s really felt this tech sell-off. The stock now finds itself flirting with single-digit territory again after a painful ~70% drop from peak to trough.

Although Palantir hasn’t had much going for it of late, long-term thinkers still have a lot to love about the firm’s growth trajectory and the talents of its intriguing CEO, Alex Karp.

The once-hot meme stock has endured its fall from grace, and while shares are still quite expensive at 14.9 times sales, I would look for the high-tech innovator to ricochet very sharply once the great tech-driven sell-off of 2021-22 comes to an end.

With the company recently showcasing its Palantir Apollo product, Wall Street analysts may finally have something to get excited about.

Recently, analysts at RBC Capital and Piper Sandler raised the bar on their price targets. Could such renewed optimism in the analyst community excite investors again?

Possibly. In the near term, expect wild swings as rate-hike jitters continue to set in.

Of all the tech stocks in the wreckage today, Palantir strikes me as one that may be worth a second look. I am bullish on PLTR stock.

Palantir’s Apollo Offering Holds Tremendous Potential

Palantir has been hard at work on its very unique suite of software offerings. Still, all investors seem to care about are near-term profitability prospects.

Palantir Apollo is a new operating system (OS) that allows for autonomous software deployment across environments. Indeed, it’s hard to understand just what that means.

In essence, the OS allows its customers to save time and money, given the intricate complexities tied to infrastructure. In that regard, Apollo seems like a value-adding offering that can pretty much pay for itself and then some for prospective customers.

Though Palantir’s rise was from secretive government contracts, it’s opening a new door to corporate clients with such intriguing software offerings.

In addition to making the lives of its users easier, Apollo has everything you’d come to expect from a Palantir product: top-of-the-line security, governance and compliance.

All such features are pretty standard when it comes to working with government contracts. In the corporate world, the value of enhanced security has also become paramount.

Palantir’s talent for creating software aimed at governments will translate over very nicely to the realm of non-government. With Palantir, firms know that their data are in good hands. That in itself is a big edge that Palantir has over some of its peers.

Palantir’s High Multiple

Palantir’s high multiple is alarming, and the company’s reputation is a huge question mark, given its past ties to ICE.

In any case, I do suspect Palantir’s efforts will pay off in time. Once growth stories matter to investors again, the stock could heat up again as it did during the WallStreetBets days.

In the meantime, all eyes will be on Palantir’s coming quarters. The last round of results was not impressive. Growth came in at a solid 34%, but margins have proven choppy.

Still, as the company looks to diversify away from government, I do think margins could have considerable room to the upside. However, it could take years before investors appreciate such efforts.

To many, Palantir is still a highly secretive company, but it’s this veil of secrecy that makes the company so exciting for those who still believe in the growth trade long term.

Arguably, a 12-14 times sales multiple is a fair price to pay for a company the caliber of Palantir.

Wall Street’s Take

According to TipRank, PLTR stock comes in as a Hold. Out of nine analyst ratings, there are three Buy recommendations, five Hold recommendations, and two Sell recommendations.

The average Palantir price target is $15.06, implying 43.1% upside potential. Analyst price targets range from a low of $10 per share to a high of $21 per share.

Bottom Line on Palantir Stock

Palantir stock is caught in no man’s land these days. The trajectory of rates will likely dictate where PLTR stock goes from here.

For longer-term thinkers, though, it’s really hard to ignore new innovations like Apollo that could change the game for firms.

With great stewards running the show and a solid Apollo Demo Day in the books, Palantir stock may prove too cheap once the worst of this market sell-off is over.

Discover new investment ideas with data you can trust.

Read full Disclaimer & Disclosure

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles