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William Blair keeps Palantir stock underperform amid Bloomberg AI warfare story

Published 2024-03-01, 08:32 a/m
Updated 2024-03-01, 08:32 a/m
© Reuters.

On Friday, William Blair maintained an Underperform rating on Palantir Technologies Inc . (NYSE: NYSE:PLTR), with a focus on the company's involvement in the Maven Smart System, a project used for weapons system targeting. A recent Bloomberg story highlighted the deployment of the system, which uses Palantir's software integrated with third-party algorithms, including Google (NASDAQ:GOOGL)'s TensorFlow machine vision AI model.

The Maven program, with Palantir as one of its contractors, has been awarded a series of significant contracts for its development and integration. This involvement is expected to enable Palantir to benefit from the federal government spending that has been boosting the sector. Notably, C3.AI (NYSE:AI) experienced a 25% increase in its stock value today after reporting positive federal momentum.

Despite these developments, Palantir's U.S. government growth was modest at 5% in the December quarter, lagging behind its peers. Defense technology company Parsons (NYSE:PSN) reported a 31% organic revenue increase from a larger base. Palantir anticipates an improvement in revenue growth in the first quarter due to new Maven-related contracts. However, even with these contracts, growth is projected to trail behind that of government technology peers like Booz Allen (NYSE:BAH) and Parsons.

Taking into account the overall performance and projections, William Blair remains bearish on Palantir. The company's 2024 revenue guidance, ranging from $2.65 billion to $2.67 billion, falls short of the sell-side analyst consensus expectations of $2.8 billion set in January 2023. At that time, Palantir's shares were priced between $6 and $8. The firm indicates that AI advancements have not significantly altered Palantir's consolidated revenue trajectory.

InvestingPro Insights

As Palantir Technologies Inc. (NYSE: PLTR) continues to navigate the competitive landscape of government technology contracts, a closer look at its financial metrics and market performance offers a nuanced view of its potential. With a market capitalization of $55.5 billion, Palantir stands out with a high gross profit margin of 80.62% over the last twelve months as of Q4 2023. This impressive margin underscores the company's ability to maintain profitability amidst its growth endeavors.

Investors are paying close attention to Palantir's earnings multiples, with a P/E ratio (adjusted) of 264.17 as of Q4 2023, which may suggest a premium valuation compared to its peers. However, the company's stock has experienced a notable return over the last year, with a 226.14% increase, reflecting investor optimism and market momentum. Moreover, an InvestingPro Tip highlights that Palantir holds more cash than debt on its balance sheet, indicating a position of financial stability that could be leveraged for future growth and investment.

Looking ahead, Palantir's net income is expected to grow this year, as indicated by another InvestingPro Tip. This anticipated growth, coupled with the fact that seven analysts have revised their earnings upwards for the upcoming period, could signal a positive shift in the company's financial trajectory. For readers interested in deeper analysis, there are additional InvestingPro Tips available for Palantir, providing a comprehensive look at the company's financial health and market potential.

For those considering an investment in Palantir or seeking to understand its market position further, you can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, which includes a wealth of additional tips and insights to guide your investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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