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Is Palantir still a buy after major run?

It’s time to talk about a newer name on the block. Here is the breakdown on $PLTR, otherwise known as Palantir.

Current Price: $25.55

52/Wk High: $33.50

52/Wk Low: $8.90

Market Cap: $54.6 billion

Read below for the breakdown!

Palantir is a developer of software solutions for higher education, healthcare, public sector companies, and technology.

While Palantir originally did not take off after its direct listing, the stock has been on fire throughout the past month, running a whopping 149.95%.

Taking a look at Palantir’s most recent earnings report the numbers were solid and surprised many that were watching the stock closely.

Palantir reported a third-quarter beat with an EPS of $0.09 versus the EPS consensus estimate of $0.02. Not only did Palantir beat on EPS but management also reported total Q3 revenues of $289.4 million, representing 52% year over year growth.

On the downside, Palantir reported a loss from operations of $847.8 million. Although, it is important to note that according to management this loss includes $847 million in stock-based compensation from the direct listing.

Throughout the third quarter, management closed 15 deals all of which over $5 million, and landed a contract renewal with an aerospace giant worth over $300 million within the course of five years.

Management also reported a solid income level of $73.1 million despite the massive operating loss.

Shifting into guidance, Palantir management is rather bullish and raised the full-year 2020 revenues guidance to a range of $1.070 billion to $1.072 billion, representing growth of over 44% year over year.

Management also reiterated Q4 revenues guidance and expects Q4 revenues to land within a range of $299 million to $301 million, representing 30% to 31% growth in revenues year over year.

Palantir management not only reiterated their bullish outlook on the rest of 2020 but also noted that 30% year over year revenue growth is expected to continue in 2021.

Given the stock's massive run within the past few months, the valuation has gotten stretched and Palantir currently trades at 36.42x book.

Taking a look at the balance sheet the numbers are solid.

Total Debt: $198 million

Total Liabilities: $1.352 billion

Total Assets: $2.604 billion

Cash & Short Term Inv: $1.800 billion

Given the numbers the analysts remain bearish on Palantir with the mean price target sitting at $13.50/share, representing a -46.88% loss.

Palantir's high price target is currently $18.00/share, representing a -28.91% loss, while the low price target sits at $10.00/share, representing a -60.51% loss.

The institutions are also not as involved with 11.77% of Palantir being owned by institutions. Top holders include Sompo Holdings, Disruptive Technology Advisors, and Point72 Asset Management.

On a technical basis, Palantir stock is quite overextended but could have lasting power. According to the six-month charts, the MACD continues to maintain upward momentum within a range of 4.12 down to 3.16.

The six-month charts are also indicating an RSI of 72.26 and CCI of 117.48, both of which are on the high end. It is also important to note that Palantir trades roughly eight points off its highs.

In short, Palantir remains a solid long-term pick given the expected growth throughout the next few years. On the downside, the stock is quite extended, and waiting for a pullback is likely a better option.


Disclaimer: This is not direct financial advice, simply an opinion based on independent research.

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