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On Tuesday, RBC Capital maintained its Underperform rating on Palantir Technologies Inc . (NASDAQ:PLTR) shares, with a steady price target of $40.00. The firm acknowledged Palantir’s solid quarterly performance, with impressive gross profit margins of 80.25% and revenue growth of 28.79%, and an increase in its 2025 guidance that surpassed consensus expectations. Despite these positive developments, Palantir stock fell approximately 8% after the market closed, though it maintains a remarkable 391% return over the past year.
RBC Capital analysts noted that while government sector results exceeded expectations, they continue to express concerns regarding Palantir’s growth potential and product differentiation. The commercial segment’s performance was slightly below consensus, which contributed to the analysts’ ongoing reservations about the company’s valuation. According to InvestingPro data, the stock currently trades at significant premiums across multiple metrics, including a P/E ratio of 505.76x and a Price/Book ratio of 58.37x.
The firm’s analysts commented on the raised guidance for 2025, suggesting that although the figures are above consensus, they question the level of conservatism in these projections. Additionally, there is uncertainty about whether estimate revisions are already reflected in the current stock price.
RBC Capital’s stance remains unchanged, with the belief that the risk-reward balance for Palantir shares is unfavorable. They highlighted that the stock is trading at a premium multiple, which might not be justified given the concerns about the company’s growth trajectory and market differentiation.
The $40.00 price target set by RBC Capital suggests that the analysts see limited upside potential for Palantir’s stock price, maintaining a cautious outlook on the company’s future performance in the market.
In other recent news, Palantir Technologies Inc. reported robust financial results for the first quarter of fiscal year 2025, with revenue reaching $883.9 million, marking a 39% year-over-year increase. This performance exceeded expectations, with U.S. commercial revenue showing a significant 71% growth. The company also raised its revenue guidance by $147 million, reflecting confidence in its growth trajectory. Analysts from various firms have adjusted their price targets for Palantir, with Loop Capital increasing theirs to $130, Wedbush raising it to $140, and Deutsche Bank (ETR:DBKGn) adjusting theirs to $80 while maintaining a Sell rating. Despite the positive revenue results, some analysts, like those at Jefferies, remain cautious due to Palantir’s high valuation, noting it trades at 56 times its estimated 2026 revenue.
Palantir’s U.S. Government revenue saw a 45% year-over-year increase, bolstered by a partnership with NATO, highlighting its expanding influence in Europe. The company’s operating margins stood at 44%, and its free cash flow was reported at $370.4 million, surpassing forecasts. Analysts have noted Palantir’s strong position in the enterprise AI market, with Wedbush emphasizing its unmatched Artificial Intelligence Product (AIP) moat. However, challenges remain, such as a 5% decline in international commercial revenue, as highlighted by Deutsche Bank. Despite these challenges, Palantir’s strategic position in AI and government sectors continues to attract attention from investors and analysts alike.
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