Palantir’s Price Target Raised to $45 With Analysts Split

Palantir Technologies‘ stock (NYSE: PLTR) has been a notable runner over the past month, gaining 20% and continuing the rally which has seen the share price more than double this year.

As the stock paused for a breather from new highs, the question of value comes to the fore, with the PE ratio of the firm considerably higher than many others. It will be good to hear then for Palantir bulls that Wedbush maintain a bullish Outperform rating and have in fact increased their price target on the stock from $38 to $45.

This move underscores the increased confidence in Palantir's enterprise data analytics platform, known as AIP and is testament to the platform's growing influence among enterprises that seek to leverage the power of artificial intelligence (AI), with Wedbush branding AIP a potential “game changer.”

The company's fiscal second-quarter earnings of 2024 reinforced this optimism, displaying a robust 27% year-over-year surge in revenue to $678.1 million. The strong performance has led Palantir to adjust its full-year revenue guidance upwards to $2.746 billion.

Contracts have played a pivotal role in Palantir's growth, with a $99.8 million military AI contract expansion with the DEVCOM Army Research Laboratory making headlines. Additionally, a partnership with Nebraska Medicine to implement its AIP brought noticeable improvements in healthcare operations and demonstrated the platform's versatility across industries.

The company's financial health remains promising, showcasing a gross profit margin of 81.39% in Q2 2024, which reflects a strong capacity for managing costs. Revenue growth is also consistent, with a 21.22% increase over the last twelve months up to Q2 2024.

Whilst Wedbush are increasing their price target, the consensus of $27.38 remains below the current price action. A word of caution, as usual, is needed. Analysts targets are driven by many factors, and can be revised downwards as quick as they are raised.

As you would expect, the opinion among analysts is mixed after a rally that has seen Palantir's stock price add 150% in 12 months. Raymond James downgraded Palantir from Outperform to Market Perform, whilst Citi stuck to its Neutral stance, indicating a spectrum of perceptions about the company's performance trajectory and future prospects.

Whilst there is no doubting the improvements seen at Palantir, trends such as that currently being experienced in AI can flip. With upcoming earnings a little over one month away, more data will be on hand before long. This could help illuminate further if PLTR can help justify it's increasing price with operational successes.