Palantir Technologies Inc. has effectively silenced certain skeptics with its recent financial results, prompting a surge in its stock towards its most significant single-day gain on record.
Following Monday’s earnings report, at least two analysts who were formerly bearish on Palantir’s stock have transitioned their positions to neutral.
They recognized the momentum in the company’s U.S. commercial business, which has been bolstered by the deployment of artificial intelligence (AI) applications.
Citi Research analyst Tyler Radke underscored the burgeoning prowess of Palantir’s U.S. commercial business, characterizing it as increasingly conspicuous.
Despite the company narrowly surpassing total revenue expectations by a mere 1%, Radke stressed the “exceptionally strong” leading indicators, including a notable 54% year-over-year growth in total billings.
He acknowledged that these figures were in comparison to what he deemed as easy benchmarks. Radke particularly lauded the sustained profitability strength, highlighting that earnings per share surpassed the consensus view by 35%, while free cash flow exceeded estimates by 62% for the fourth quarter.
Consequently, he upgraded Palantir’s stock from sell to neutral on Tuesday and doubled his price target to $20.
During Tuesday morning trading, Palantir’s stock surged by 27%, poised to achieve its highest single-day percentage gain on record.
Jefferies analyst Brent Thill also shifted away from his bearish stance, attributing the faster-than-expected ramp-up of the AI Platform (AIP) as the reason for the change.
He upgraded his rating from underperform to hold, emphasizing the momentum in AIP deals. However, Thill expressed persistent valuation concerns, highlighting that Palantir’s stock trades at a significant premium compared to other large-capitalization software companies.
BofA Securities analyst Mariana Perez Mora expressed enthusiasm about Palantir’s latest results, particularly commending the early-stage success of AIP. She noted a 70% increase in revenue for Palantir’s U.S. commercial business in the latest quarter.
Mora interpreted this substantial growth as indicative of Palantir’s unique role in facilitating AI-powered, data-driven decision-making in a tangible, accessible, and operational manner. Despite the positive sentiment, she upheld a buy rating and raised her price target to $24 from $21.
However, William Blair’s Louie DiPalma maintained his bearish outlook, forecasting that Palantir’s shares would revert to their recent downward trend following the initial earnings surge.
DiPalma highlighted that Palantir’s U.S. commercial business accounts for only about a fifth of its total revenue, and in his assessment, the other divisions still encounter challenges.
