Palantir Technologies Inc.

PLTR Details

Palantir Technologies Inc. (NYSE: PLTR) develops software to help companies handle huge, diverse data collections to obtain insight and improve operational outcomes.

Key Highlights

• New Partnership: On December 20, 2021, the company and Dewpoint Therapeutics announced a partnership to use Palantir's Foundry platform to help Dewpoint's efforts to discover treatments and cures for the world's most challenging diseases.
• Positive Long-Term Guidance: As per long-term guiding strategy of company’s CEO, the company is predicting annual revenue growth of 30% or more from 2021 to 2025.
• Expansion in South Korea: PLTR and Hyundai Heavy Industries Group collaborates to establish a big data platform to boost the big data platform industry.

Q3FY21 Results:

• Robust Growth in Top Line: The company's revenue has increased by 35.51% to USD 392.15 million in Q3FY21 from USD 289.37 million in Q3FY20 due to continuous expansion and recent partnership.

Source: Company Website

 Solid jump in Gross profit: The company’s gross profit during the quarter under review nudged by 118% to USD 305.34 million against USD 140.02 million reported a year before.

• Free Cash flow Margins: From negative margins of 18% in Q3FY20 to positive margins of 30% in Q3FY21, the company's adjusted free cash flow margins have turned positive.

Key Risks:

• Risk of Fluctuation in Operations: The company’s quarterly results of operations and critical business measures might fluctuate significantly in future periods and may not fully reflect its business's underlying performance due to failure in planned executions.

Outlook:

The company has posted positive numbers and is expected to reach USD 418 million in Q4FY21. Further, the company has raised its adjusted free cash flow forecast to more than USD 400 million, up from more than USD 300 million before. In addition, the company has sufficient cash and a strong balance sheet to expand its business model with new partnerships that will successfully execute its growth strategy.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

Source: Analysis by Kalkine Group

Stock Recommendation:

PLTR’s share price has decreased by 49.12% in the past three months and is currently leaning towards the 52-week low of USD 11.75. The stock is currently trading below its 50 and above 200 DMA levels, and its RSI Index is at 16.65, implies that the stock is hovering in an oversold territory. Further, we have valued the stock using the EV / EBITDA multiple based relative valuation methodology and arrived at a target price of USD 14.88 as of January 26, 2022.

Considering the major correction in the stock price, growing business model, strong revenue track record, and current valuation, we recommend a “BUY" rating on the stock at the closing price of USD 12.51 as of January 27, 2022, 12:52 PM ET.

PLTR Daily Chart (Source: REFINITIV) Analysis by Kalkine Group

 * The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending on risk tolerance, investors may consider unwinding their positions in an individual stock once the estimated target price is reached. 

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