Palantir Technologies (NYSE:PLTR), which specializes in software platforms designed for big data analytics, saw its shares pop on Monday following a major endorsement. Analysts at Argus Research initiated coverage on PLTR stock with a “buy” rating, along with a $29 price target. They cited a rising emphasis on business solutions that could help lift the bottom line.
According to a Seeking Alpha report, analyst Joseph Bonner acknowledged that Palantir has consistently addressed demand requirements of U.S. defense and intelligence agencies. However, the analytics specialist is also looking to expand into the commercial sector. In particular, the area focusing on data management and analytics platforms appears to be a viable framework.
Per Seeking Alpha, Bonner cited that “Palantir’s government business generated 55% of revenue in 2023, while the remaining 45% from its commercial segment, of which 38% was generated outside the U.S.” While the government business should continue to expand, the Wall Street expert believes that the future growth driver of PLTR stock centers on the commercial business.
PLTR Stock Isn’t Perfect but Is Potentially Compelling
While the booming artificial intelligence (AI) sector provides an opportunity for Palantir to differentiate itself from the competition, Bonner acknowledges that PLTR stock isn’t perfect. For one thing, the market prices shares at a premium. Right now, they trade at almost 75x forward earnings and nearly 25x trailing-year revenue.
Second, while PLTR stock is up over 49% on a year-to-date basis, it’s also been volatile. Compared to its early 2021 peak price, Palantir is still sitting in the red. Still, with a trailing 52-week performance of almost 57%, PLTR has been making steady progress, reaffirming Argus’ confidence.
Experts at Argus also added that “the company has been dramatically improving its profitability and cash flow over the past year.” Seeking Alpha notes that “Argus is establishing a 2024 non-GAAP EPS estimate of $0.33 and a 2024 forecast of $0.40 for Palantir.”
Still, it should be noted that the analyst community overall remains pensive over PLTR stock, rating it a consensus hold. Further, the average price target lands at $22.11, implying roughly 11% downside risk.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
