On Wednesday, William Blair maintained an Underperform rating on shares of Palantir Technologies Inc . (NASDAQ:PLTR), citing concerns about the company's revenue trajectory in relation to its 2025 target.
While Palantir's software has seen increased adoption, with current revenue growth at 24.52% and impressive gross profit margins of 81.1%, the firm is on track to fall short of its previously stated $4.5 billion revenue goal by over $700 million. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with multiple valuation metrics suggesting premium pricing.
Palantir's current valuation has soared to $30 billion more than the combined worth of its artificial intelligence data platform counterparts, Snowflake (NYSE:SNOW) and Databricks, with its market capitalization now reaching $161.65 billion.
This is despite Snowflake's recent 30% stock increase after affirming its $3.6 billion revenue guidance and Databricks' successful $8 billion funding round, which set its valuation at $55 billion. InvestingPro subscribers have access to over 20 additional insights about Palantir's valuation metrics and growth potential.
Palantir's stock price rose by 7% on Tuesday, driven by several factors including prospective inclusion in the Nasdaq 100 index, a new federal government security certification, and positive market responses to contract extensions with various branches of the U.S. military. These contracts include potential modifications to the Vantage project, which could be worth up to $619 million, and other defense-related projects.
Despite these positives, William Blair does not anticipate consensus estimates for Palantir's revenue to increase significantly due to these developments. The firm also expressed caution over market conditions that could lead to a repeat of the significant decline in Palantir's share price, which dropped 81% from January 2021 through December 2022 amid decelerating revenue growth and valuation concerns.
In other recent news, Palantir Technologies Inc. has achieved significant milestones, including receiving FedRAMP High Authorization for its cloud services, which allows it to offer its full suite of products to the U.S. Government.
The development builds upon Palantir's existing authorizations, further establishing it as a trusted provider of secure cloud services. The company also reported a 30% year-over-year increase in revenue, primarily driven by a surge in AI demand, and raised its full-year revenue guidance to $2.807 billion.
In addition, Palantir has been the focus of multiple analyst rating changes. BofA Securities increased its price target for Palantir, expecting a 34% commercial growth over the next three years. Similarly, Wedbush raised its price target on Palantir's shares, reflecting a strong belief in the company's AI strategy. However, Argus and Jefferies downgraded Palantir due to valuation concerns.
Lastly, Palantir introduced new developer tools at its inaugural Developer Conference, DevCon, aimed at enhancing the development process for its users. The company also announced its decision to transfer its Class A Common Stock listing from the New York Stock Exchange to the Nasdaq Global Select Market.
Despite a 7% contraction in international commercial revenue, Palantir secured 104 deals each worth over $1 million, contributing to a total U.S. Commercial contract value of nearly $300 million.
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