On Wednesday, Raymond (NS:RYMD) James maintained a Market Perform rating for shares of Palantir Technologies Inc . (NASDAQ:PLTR), following an update to their financial model. According to InvestingPro data, PLTR currently trades at a P/E ratio of 304.47 and has delivered an impressive 293% return over the past year, though analysis suggests the stock is trading above its Fair Value.
The revision accounts for the vesting of approximately $120 million in stock appreciation rights (SARs), which were triggered as Palantir’s shares traded above $50.00 during the fourth quarter of 2024.
The analyst at Raymond James adjusted the company’s fourth-quarter earnings estimates to reflect the additional stock compensation expense. The updated model now projects a decrease in GAAP earnings per share (EPS) by roughly $0.05, from the prior estimate of $0.06 down to $0.01.
Despite this, the firm’s projections for adjusted EBITDA (AEBITDA) and adjusted earnings per share (AEPS) remain unchanged at $321.7 million and $0.11, respectively. Notable is Palantir’s robust gross profit margin of 81.1% and strong financial health score rated as "GREAT" by InvestingPro analysts.
Gesuale indicated that while the GAAP metrics for Palantir may present cost headwinds not currently modeled by the street, the primary focus for evaluating the company’s performance will likely be on the top line, AEPS, and AEBITDA. He expressed approval of Palantir’s strategy to align compensation with shareholder value creation, suggesting that the modest reduction in GAAP EPS is a side effect of this approach.
Looking ahead, the analyst conveyed optimism about Palantir’s long-term positioning within the artificial intelligence sector. However, the decision to uphold the Market Perform rating was based on the belief that Palantir’s stock needs time to consolidate its significant gains from the past few years and to mature into its current valuation. For investors seeking deeper insights, InvestingPro offers comprehensive valuation analysis and 18 additional ProTips for PLTR, including detailed Fair Value calculations and growth projections available in the Pro Research Report.
In other recent news, Palantir Technologies has been the subject of various significant developments. Morgan Stanley (NYSE:MS) downgraded Palantir to an Underweight rating due to valuation concerns, despite acknowledging the company’s positive trajectory in the artificial intelligence (AI) sector.
Contrarily, Wedbush maintained an Outperform rating on Palantir, highlighting the company’s strong positioning in the rapidly growing AI market and its potential for further expansion.
UBS analyst Karl Keirstead initiated coverage on Palantir with a neutral rating and an $80 price target. Keirstead’s analysis is based on conversations with 17 large Palantir customers, aiming to demystify the core functions of Palantir’s offerings and their potential uplift from AI-Data exposure.
Palantir secured a significant contract with the U.S. Army, valued at approximately $400.7 million, reinforcing its role in providing data analytics solutions to the military sector. The company also announced its first group of partners for its Warp Speed initiative aimed at advancing American manufacturing through artificial intelligence and technology. The cohort includes Anduril Industries, L3Harris, Panasonic (OTC:PCRFY) Energy of North America, and Shield AI.
In a collaboration with Pray.com, Palantir has made significant advancements in language translation capabilities. Utilizing Palantir’s Ontology Software (ETR:SOWGn) Development Kit (OSDK), Pray.com has automated the translation process, enhancing content accessibility. Despite these developments, analysts from William Blair have maintained an underperform rating on Palantir due to concerns about the company’s revenue projections.
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