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On Tuesday, HSBC analysts increased their price target on Palantir Technologies Inc . (NASDAQ:PLTR) shares, lifting it to $96.00 from the previous $38.00, while keeping a Hold rating on the stock. The revision follows Palantir’s release of its first-quarter results for 2025 and its full-year guidance, which surpassed both the consensus and HSBC’s expectations. According to InvestingPro data, Palantir’s stock is trading near its 52-week high of $85.22, with an impressive market capitalization of $190.76 billion. InvestingPro analysis indicates the stock is currently overvalued based on its Fair Value model.
Palantir’s guidance indicated a year-over-year revenue growth of 36% for the first quarter and 31% for the full year of 2025, building on its strong historical performance with a revenue growth of 24.52% in the last twelve months. Additionally, the company expects non-GAAP operating profit to grow by 57% in the first quarter and 38% throughout 2025. Operating profit margin (OPM) is projected to be 41% for the first quarter and 42% for the entire year, supported by the company’s impressive gross profit margin of 81.1%.
The analysts noted that the strong operating profit margin in the fourth quarter of 2024 was a positive surprise. However, the guidance suggests a normalization of margins to lower levels in 2025, albeit still robust. They believe that Palantir is nearing a ceiling for operating profit margin, which could potentially limit earnings per share (EPS) growth in the future.
Despite the strong performance and guidance, HSBC analysts expressed concerns about the stock’s valuation. They pointed out that the market is assigning a significant premium to AI companies like Palantir, which is currently trading at what they describe as "eye-wateringly high valuation" metrics for 2025, including a price-to-earnings (PE) ratio of 151 times, a price-to-earnings-growth (PEG) ratio of 6 times, and an enterprise value-to-sales (EV/Sales) ratio of 46 times. Current InvestingPro data shows an even higher P/E ratio of 388.88x, supporting these valuation concerns. Despite high multiples, InvestingPro’s Financial Health Score rates Palantir as "GREAT" with a score of 3.4 out of 5.
The analysts concluded that while they recognize the ongoing strength in AI demand in the U.S., which could lead to a guidance upgrade over 2025, there is also a risk of a potential derating from current levels due to the high valuation premium. For deeper insights into Palantir’s valuation and growth prospects, InvestingPro subscribers can access 20 additional ProTips and a comprehensive Pro Research Report that provides detailed analysis of the company’s fundamentals and growth trajectory.
In other recent news, Palantir Technologies has been the focus of several significant adjustments in stock price targets following robust financial results. Mizuho (NYSE:MFG) Securities raised its price target for Palantir to $80, while maintaining an underperform rating. This came after Palantir reported a strong fourth quarter with a 36% year-over-year revenue increase, surpassing projections. Similarly, RBC raised its price target for Palantir to $40, but retained its underperform rating. Cantor Fitzgerald also increased its price target for Palantir to $98, while UBS raised its price target to $105. Both firms maintained a neutral rating on the stock.
Raymond (NSE:RYMD) James maintained its Market Perform rating for Palantir, following the company’s impressive performance that included a 64% growth in U.S. commercial revenue. Palantir’s guidance for the coming year was notably optimistic, with a projection of $3.749 billion in revenue, which is 7.4% higher than Wall Street’s expectations. The company also secured a significant contract with the U.S. Army, valued at approximately $400.7 million.
These recent developments underscore the dynamic performance and growth prospects of Palantir Technologies. Despite the positive financial performance and raised price targets, most firms maintained a neutral rating on the stock, indicating a cautious stance on its current valuation.
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