Over the past year and a half or so, Palantir (NYSE:PLTR) stock has been a favorite choice for investors looking to make the most of the AI trend. The big data company has positioned itself well in the space, bringing to market its AIP (AI platform) in a timely fashion just as the AI trend was taking off.
The result has been a stock that has gained 230% since the start of 2023, and that accounts for a recent pullback following the company’s Q1 results.
Not that those were bad, it’s more that some sky-high expectations weren’t conclusively met (essentially, the outlook wasn’t bullish enough).
In fact, when looking at the readout, top investor the Value Portfolio says it was an “incredibly strong” quarter as Palantir “continued to achieve strong growth and focus on its portfolio.”
Once the weak part of the business, the performance of the commercial segment was particularly impressive, especially in the US, where it saw 40% year-over-year growth and now represents more than 50% of commercial revenue. Overall, commercial revenue increased by 27% y/y to $299 million.
The company has also been winning significant contracts, including a $178 million deal with the US Army to develop Titan, its next-generation targeting system. It has also been working with the VA (Department of Veterans Affairs), for which it has identified $90 million in savings in just six months of work. “These portfolio wins will continue to save other organizations money, and thereby earn Palantir longer contracts,” says the Value Portfolio. “These portfolio wins show the strength of its offerings as it continues to do something no other company can do.”
Palantir has also been turning a profit and anticipates maintaining GAAP profitability for each quarter in 2024. The company is also eyeing a 2%+ FCF yield for the year. Thus, the Value Portfolio goes on to add, with “incredibly strong growth, especially in the goldmine that is U.S. commercial customers, we expect its growth to remain strong.” That should result in more growth on the FCF front, which will go toward supporting “long-term shareholder returns.”
Bottom-line, the Value Portfolio, who is rated in the top 1% of TipRanks’ stock experts, rates PLTR shares a Buy. (To watch the Value Portfolio’s track record, click here)
Generally speaking, however, the Wall Street analysts have a different idea. PLTR stock only claims a Hold (i.e. neutral) consensus rating, based on 7 Hold recommendations, 2 Buys and 3 Sells. Going by the $21.89 average price target, the shares will stay rangebound for the time being. (See Palantir stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
