William Blair sees risk for Palantir as Space Force ‘splits the pie’

Last Tuesday, Space Systems Command, Los Angeles Air Force Base, announced that it awarded Palantir a three-month bridge extension, instead of a long-term renewal, on its Space Force data software services contract, which is Palantir’s third-largest contract, William Blair analyst Louie DiPalma the analyst tells investors in a research note. And late Friday, Space Systems Command announced that it selected 17 other vendors along with Palantir for a five-year, $900M data analytics contract that builds upon the sole-sourced Palantir program, adds the analyst. The firm says there is risk that Palantir’s growth for the program will be limited as the Space Force "splits the pie among the numerous vendors." Over the long term, there is the potential for the same type of migration off of the Palantir platform that took place with the Raven program and is taking place for the FDA’s CDER program, contends Blair. The firm sees risk that Palantir’s "premium 8.5-times sales multiple will compress as competition pressures revenue growth and profitability." It keeps an Underperform rating on the shares and sees downside to $4 and $5 in a "bear case scenario."