Palantir Technologies (NYSE: PLTR), a leader in big data analytics and artificial intelligence, is set to release its second-quarter earnings on Monday, August 5. This has prompted analysts to reassess their price targets, reflecting both optimism and caution about the company’s future performance.
Palantir has evolved from focusing primarily on government contracts to diversifying its income streams with significant commercial sector expansions.
One notable development is a recent multi-year agreement with Tree Energy Solutions (TES), announced on July 29.
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This partnership will see TES leveraging Palantir Foundry and the Palantir AI Platform (AIP) for supply chain management, simulation, investment optimization, and site selection, showcasing Palantir’s strategic push to enhance its commercial segment.
Analyst price targets and market performance
Several factors are influencing Palantir’s stock price ahead of its Q2 earnings report. The company’s advancements in artificial intelligence, particularly its AIP, have gained significant traction with over 1,300 bootcamps completed since 2023.
Furthermore, government contracts remain a strong revenue driver, with notable deals including the U.S. Army’s MSS contract and the Department of Defense’s CDAO contract.
Additionally, the stock has shown strong performance recently, recording gains of 3.36% during the July 31 trading session, setting the price of PLTR stock at $27.20 by the time of writing.
Consequently, Citi’s (NYSE: C) raised its price target for Palantir from $25 to $28, driven by the expected momentum of Palantir’s AI Platform.
Citi’s analysts believe that Palantir will exceed earnings expectations, citing robust performance in its commercial division.Similarly, Jefferies increased its price target from $24 to $28 while maintaining a “hold” rating.
However, contrasting these positive outlooks, Mizuho recently downgraded Palantir from “neutral” to “underperform,” despite raising their price target slightly from $21 to $22.
Analyst Matthew Broome expressed concerns over Palantir’s high valuation and limited earnings visibility, highlighting a 20% downside risk.
For the second quarter, analysts project Palantir’s revenue to grow by 22.34% to $652 million, with adjusted gross profit expected to rise by 26.18% to $538 million—the largest year-over-year growth since Q2 2022.
Earnings per share (EPS) are anticipated to reach 3 cents, up from 1 cent a year ago. Historically, Palantir has exceeded EPS estimates in two of the past three quarters, meeting them once.
Despite the mixed sentiments, Palantir’s stock has surged 60% year-to-date trading near its 52-week high.
Based on 14 Wall Street analysts offering 12-month price targets for Palantir Technologies in the last three months, the average price target is $22.42 with a high forecast of $35 and a low forecast of $9, reflecting a broad range of perspectives on the stock’s valuation and growth potential.
Palantir’s valuation ratios are notable, with a trailing PE ratio of 227.50 and a forward PE ratio of 78.48. The company’s price-to-sales (PS) ratio is 24.07, with a forward PS ratio of 19.53. Palantir’s PEG ratio stands at 1.73, indicating growth potential relative to its earnings.
As Palantir prepares to release its earnings, investors are keenly watching how the company meets these expectations and navigates the balance between its high valuation and growth prospects
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