While subsequent gains may come gradually, there’s plenty in play that could drive the next big liftoff for Palantir stock in the coming months.
Palantir Technologies (NYSE:PLTR) entered rebound mode last month, and appears set to stay there for quite some time. Now back above $25 per share, a move to even higher prices may be just around the corner for Palantir stock.
Investors are warming back up to the AI enterprise software company’s shares, for reasons that go beyond mere hope and hype.
We’re not the only ones who have recently taken notice about Palantir’s success in generative AI software, and its impact on driving a growth resurgence.
Besides market participations increasingly coming to this conclusion, so too has a Wall Street sell-side analyst, who this week issued a bullish research note on PLTR.
Although subsequent gains may arrive more gradually, here’s why you may want to seize the opportunity today, and enter a position.
On June 17, Argus Research’s Joseph Bonner issued a “buy” rating on PLTR, with a price target of $29 per share. In the research note, Bonner focused mainly on Palantir’s potential to continue capitalizing on growing AI software demand from commercial clients.
Bonner highlighted Palantir’s AI Platform’s impact on revenue growth and improved profitability.
Analyst predicts sustained earnings growth in the coming years. Bonner predicts an average annual earnings growth of 19% over the next five years.
The market has responded positively to this buy rating. Palantir stock surged 6.15% on rating release day. Despite increasing bullishness for PLTR, we understand your hesitation to enter a position.
After all, PLTR continues to sport a sky-high valuation of 75.8 times forward earnings. However, while Bonner honed into key aspects of the Palantir bull case, there is a lot more to it than that. Here’s why.
As we have pointed out in prior Palantir stock coverage, the company’s success in AI may not just be limited to its commercial segment.
Based on recent results and contract wins, the launch of AIP and other AI endeavors appear to be having a positive impact on the performance of Palantir’s governmental business as well.
Last quarter, governmental sales growth re-accelerated from 11% to 16%. Late last month, the company announced that it had won a $480 million contract with the U.S. Department of Defense .
This contract is for the development of a prototype for the DoD’s Maven artificial intelligence system. Subsequent company announcements could further indicate that the governmental segment is experiencing a much stronger growth resurgence.
Taking into account both Palantir’s strong commercial and government growth prospects, forget about earnings rising by just 19% annually over the next five years. With Palantir scaling up faster than anticipated, this could translate into far more outsized levels of earnings growth.
Again, don’t expect this bull case for PLTR to play out immediately. Count on it being a gradual process. That said, the next big run-up for Palantir may only be a little bit more than a month away.
Investor enthusiasm for Palantir Technologies is heating back up, but it’s not as if this has become a “too hot to touch” situation. Buy in today, at around $25 per share, could prove profitable.
Although the excitement could cool down for a bit after the recent “buy” rating, there’s plenty that could drive the next big boost.
Namely, Palantir’s next scheduled quarterly earnings release, expected to occur sometime in early August. The latest results and updates to outlook could drive another wave of bullishness.
Alongside this, the company in the coming months could announce additional contract wins and corporate collaboration agreements. S
o far in 2024, Palantir has entered or expanded partnership deals with major companies like Oracle (NYSE:ORCL) and Eaton (NYSE:ETN).
As the bull case gets even stronger, feel free to hop on the Palantir stock bandwagon.
Palantir stock earns a B rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
