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Palantir Nabs Multi-Million-Dollar Contract With PG&E; Shares Gain 3%

Palantir Technologies announced that it has nabbed a multi-million-dollar contract for Pacific Gas and Electric Company (PG&E) to use its foundry to enhance the reliability of electric grids in California. Shares advanced 3.2% in Tuesday’s trading.

Under the terms of the multi-year contract, California’s largest investor-owned utility will deploy Palantir’s (PLTR) technology to streamline data management across the company and improve its electric operations and asset management. The contract marks the first time Palantir’s foundry software will be used by a major US utility.

Palantir said that PG&E (PCG) has already started the deployment of its software to create a single, integrated platform to give decision-makers a real-time, complete operational picture. While in its early stages of deployment, the technology has been used to help PG&E to make effective, timely, data-driven decisions related to its public safety power shutoff program. Going forward, the technology is expected to be used for PG&E’s wildfire risk mitigation programs and other initiatives in the future.

“Our engagement with California’s largest investor-owned utility underlines our commitment to increasing safety and reliability for customers and communities across the region,” said Olivier Farache, Palantir’s Head of Utility Sector. “It shows our foundry software can power data-driven decisions that aim to improve service delivery.”

Palantir is a big data specialist which builds enterprise software platforms for the deployment by organizations with complex and sensitive data environments. In the past, the company has inked contracts to provide data analytics to government bodies.

Since PLTR started trading at the end of September, the value of the stock has almost tripled. Following the stock’s sharp rally, Citigroup analyst Tyler Radke last week downgraded PLTR to Sell from Hold but increased the price target to $15 (42% downside potential) from $10, as he believes that the stock will be “vulnerable” in 2021. 

“Specifically we see risk around the lapping of Covid-19-related contracts, which have the potential to become headwinds in second-half 2021 into 2022,” Radke wrote in a note to investors. “We are also more skeptical on the PLTR bull case in the commercial business, where there is optimism that PLTR’s simplified new products can drive an inflection in customer growth. Here, we see high levels of competition and the lack of investment by PLTR in the ‘right areas’ limiting success.”

The rest of the Street is cautiously bearish on the stock. The Moderate Sell analyst consensus is based on 3 Sells, 2 Holds versus only 1 Buy. The average price target stands at $17.33, implying downside potential of about 35% to current levels.

PLTR gets a 3 out of 10 on Tipranks’ Smart Score rating, indicating that the stock will most likely underperform market expectations.

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