Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 30 Jan, 25 | PLTR | Buy | USD 79.76 | USD 85.94 | USD 93.32 | 5 days | 17.0% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Palantir Technologies Inc. builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. The company provides Palantir Gotham, a software platform which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform. It also offers Palantir Foundry, a platform that transforms the ways organizations operate by creating a central operating system for their data; and allows individual users to integrate and analyze the data they need in one place. In addition, it provides Palantir Apollo, a software that enables customers to deploy their own software virtually in any environment. Palantir Technologies Inc. was incorporated in 2003 and is based in Denver, Colorado.
Robust Cash Flow – Adjusted free cash flow reached $435 million in Q3, representing a 60% margin, and exceeded $1 billion on a trailing twelve-month basis, indicating strong financial discipline
Strong Revenue Growth – The company achieved a 30% year-over-year revenue increase to $726 million, with U.S. commercial revenue growing even faster at 54% year-over-year to $179 million.
Lower GAAP Profitability Compared to Adjusted Metrics – GAAP income from operations stood at $113 million (16% margin), significantly lower than the adjusted income from operations of $276 million (38% margin), highlighting reliance on non-GAAP adjustments for profitability.
Slower Sequential Revenue Growth – While year-over-year growth was strong, quarter-over-quarter revenue growth was only 7%, suggesting a possible slowdown in momentum.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 79.76 | 69.39 | 85.94 | 93.32 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Strong Revenue Growth in Q3 2024
The company reported robust financial results for the third quarter of 2024, with total revenue reaching $726 million, representing a 30% year-over-year increase and a 7% sequential increase. U.S. revenue demonstrated particularly strong performance, growing 44% year-over-year and 14% quarter-over-quarter to $499 million. U.S. commercial revenue surged by 54% year-over-year to $179 million, while U.S. government revenue increased by 40% year-over-year to $320 million. These figures underscore the company’s expanding footprint across both commercial and government sectors.
Profitability and Operational Efficiency
The company achieved GAAP net income of $144 million, reflecting a 20% margin, while GAAP income from operations totaled $113 million, representing a 16% margin. On an adjusted basis, income from operations reached $276 million, equating to a 38% margin. Additionally, the company maintained a strong Rule of 40 score of 68%, reinforcing its commitment to balancing growth and profitability. GAAP earnings per diluted share doubled year-over-year to $0.06, while adjusted earnings per diluted share grew 43% to $0.10.
Continued Customer and Deal Growth
The company experienced significant customer growth, with its total customer count increasing by 39% year-over-year and 6% quarter-over-quarter. It closed 104 deals exceeding $1 million in value, further solidifying its position as a preferred partner for large-scale engagements. This sustained customer momentum reflects the company's ability to deliver high-value solutions and expand its market presence.
Strong Cash Flow and Liquidity Position
The company ended the quarter with a strong liquidity position, holding $4.6 billion in cash, cash equivalents, and short-term U.S. Treasury securities. Cash from operations was $420 million, representing a 58% margin, while adjusted free cash flow totaled $435 million, equating to a 60% margin. On a trailing twelve-month basis, cash from operations reached $995 million, and adjusted free cash flow exceeded $1 billion. These metrics highlight the company’s strong financial discipline and ability to generate significant cash flow.
Upgraded Financial Outlook for Q4 and Full-Year 2024
Looking ahead, the company has raised its guidance for the fourth quarter of 2024, expecting revenue between $767 million and $771 million and adjusted income from operations between $298 million and $302 million. For the full year, revenue guidance has been increased to a range of $2.805 billion to $2.809 billion, with U.S. commercial revenue projected to exceed $687 million, reflecting at least 50% growth. Adjusted income from operations is now expected to be between $1.054 billion and $1.058 billion, while adjusted free cash flow is forecasted to exceed $1 billion. Additionally, the company remains confident in achieving GAAP operating income and net income in every quarter of the year.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Palantir Technologies Inc (NASDAQ: PLTR) at the closing price of USD 79.76, as on January 29, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Software - Infrastructure
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| PLTR Palantir Technologies Inc. Class A Common Stock |
-0.15 0.18% | 84.25 | 248.71 | 58.48 | 18.02 | 11.77 | 16.23 | 167.02 |
| MSFT Microsoft Corporation |
5.93 1.58% | 381.32 | 37.32 | 29.94 | 13.03 | 12.45 | 13.06 | 24.59 |
| ORCL Oracle Corporation |
2.11 1.51% | 141.92 | 29.34 | 18.66 | 5.55 | 74.06 | 7.10 | 18.13 |
| ADBE Adobe Systems Incorporated |
-3.47 0.90% | 380.06 | 46.32 | 26.81 | 11.51 | 16.73 | 11.55 | 31.20 |
| PANW Palo Alto Networks Inc |
-0.45 0.26% | 170.19 | 44.57 | 45.05 | 11.98 | 20.70 | 11.82 | 77.11 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is January 29, 2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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