Shares of the software company Palantir Technologies (PLTR) are under pressure, closing on Monday down 7.5%.
The overall selloff in equities following the China Evergrande (EGRNF) crisis weighed on Palantir stock.
Nevertheless, Palantir shareholders are a happy bunch, as the stock has rallied 165% since it was listed on the exchange on September 2020. (See Palantir Technologies stock charts on TipRanks)
The steep growth in Palantir stock is backed by its strong performance metrics that provide increased visibility over future growth. I maintain a bullish outlook on Palantir stock.
The company’s total deal value (TDV) increased 63% year-over-year to $3.4 billion in the first half of 2021. Moreover, the total contract value (TCV) booked jumped 175% year-over-year during the last reported quarter. Further, its average revenue per top 20 customers increased both on a year-over-year, and sequential, basis.
Palantir closed 62 deals of at least $1 million during Q2. Moreover, 21 of those deals were of at least $10 million.
Acknowledging Palantir’s strong performance, William Blair analyst Kamil Mielczarek stated that “the most surprising updates from the earnings release included rapid acceleration in the growth of several forward looking metrics,” including TDV, (TCV), and remaining performance obligations.
However, Mielczarek has a Sell rating on Palantir stock. The analyst noted that this growth came on the back of “a significant contribution from strategic investments made by Palantir.”
Mielczarek added that “We remain concerned that after adjusting for duration and strategic investments, these metrics suggest risk that revenue growth decelerates below 30% in the next 12 to 24 months.”
Overall, on TipRanks, Palantir stock has an analyst rating consensus of Moderate Sell, based on one Buy, two Hold, and three Sell ratings. The average Palantir price target of $24 implies 11% downside potential to current levels.
Further, PLTR scores a 3 out of 10 on TipRanks’ Smart Score rating system, indicating that it has strong potential to underperform market expectations.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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