Citi raises Planet Labs stock price target to $7 on strong demand

On Friday, Citi analysts increased the price target for Planet Labs (NYSE: PL) stock to $7 from $5, while maintaining a Buy rating. The analysts highlighted that the company’s first-quarter results exceeded consensus expectations, marking its first quarter of positive free cash flow. According to InvestingPro data, the stock has shown remarkable momentum, delivering a 227% return over the past year, with the current price at $5.96.

The analysts noted a significant rise in demand signals, especially from European customers seeking to enhance their Defense and Intelligence (D&I) capabilities. This increase in demand is expected to drive further adoption of Planet Labs’ services. The analysts mentioned a potential path to sustained free cash flow, as international customers appear willing to fund the company’s capital expenditures ahead of service provision.

Despite the positive outlook, the analysts acknowledged concerns regarding a report about the National Reconnaissance Office (NRO) potentially reducing the Electro-Optical Commercial Layer program, which contributes approximately $43 million in annual revenue for Planet Labs. However, the analysts expressed skepticism about the likelihood of such a cut, citing the NRO’s Congressional mandate to prioritize commercial providers.

The report underscores the growing interest in Planet Labs’ offerings, driven by increased demand from international markets, particularly in Europe. As a result, Citi analysts remain optimistic about the company’s future prospects and financial performance.

In other recent news, Planet Labs reported impressive financial results, with first-quarter revenue reaching $66.3 million, surpassing the estimated $62.3 million and marking a 9.6% increase year-over-year. The company achieved an adjusted EBITDA of $1.2 million, a significant improvement from the previous year’s loss of $8.4 million. This performance led to Planet Labs’ first quarter of positive free cash flow, recording $8.0 million against an expected negative $9.4 million. Analysts from Craig-Hallum, Cantor Fitzgerald, and Wedbush have responded positively, with Craig-Hallum raising the stock price target to $7.00 and Wedbush doing the same, while Cantor Fitzgerald maintained a $6.30 target. The company has increased its fiscal year 2026 revenue guidance to between $260 million and $280 million, slightly below some estimates but still a positive sign for investors. Planet Labs also anticipates an adjusted EBITDA loss of $7 million to $12 million for FY26, aligning with market expectations. The company continues to secure significant contracts, such as a $230 million deal with JSAT, contributing to its robust pipeline. Analysts remain optimistic about Planet Labs’ future, highlighting its position in the Earth Intelligence sector and potential benefits from AI-enabled product offerings.

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