Palantir Technologies Inc.

PLTR Details

Palantir Technologies Inc. (NYSE: PLTR) offers solutions to help enterprises manage massive disparate data sets to obtain insight and deliver operational outcomes. Palantir Gotham (Gotham), Palantir Foundry (Foundry), and Palantir Apollo (Apollo) are its three leading software platforms. Its software is currently utilized in over 50 industries worldwide, and it has 237 clients as of December 31, 2021.

Latest News:

• New Partnerships: PLTR and Jacobs, an American technical professional services firm, announced a global strategic alliance on March 2, 2022, focusing on data and technology solutions for the infrastructure and national security markets.
• Strengthen the Fight Against COVID-19: On February 22, 2022, PLTR stated that the Centers for Disease Control and Prevention (CDC) had selected the company to expand its role as a trusted technology partner in the federal COVID-19 response by supporting required distribution and supply-chain operations.

FY21 Results:

• Growth in Topline: PLTR reported a 41.11% increase in revenues to USD 1.54 billion in FY21 (ended December 31, 2021) compared to USD 1.09 billion in FY20, due to a rise in the adoption of its products and services within the organizations.
• Decline in Losses: PLTR's net losses fell to USD 520.38 million in FY21, down from USD 1.17 billion in FY20.
• Robust Balance Sheet: As of December 31, 2021, the company's cash and cash equivalents totaled USD 2.52 billion, with no outstanding debt.

Key Risks:

• Customer Concentration Risk: In FY21 and FY20, the top three PLTR clients accounted for 18% and 25% of the company's sales, respectively. Its revenue may fall if it does not maintain or expand client connections or if significant consumers reduce their purchases.

Outlook:

• Q1FY22 Estimates: In the first quarter of the fiscal year 2022, PLTR anticipates revenues of around USD 443 million and an adjusted operating margin of approximately 23% as of February 17, 2022.

• FY22 Estimates: PLTR anticipates a 30% or higher yearly revenue increase through 2025. It also forecasts an adjusted operating margin of roughly 27%.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation:

PLTR's share price has surged 19.60% in the past month and is currently trading around the lower-band of the 52-week range of USD 9.74 to USD 29.29. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 15.00. The prospect of aggressive rate hikes is disappointing news for high-growth tech equities since it raises capital expenses and reduces the value of future earnings.

Considering the current trading levels, strategic partnerships, strong balance sheet, positive outlook, current valuation, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 13.18, down 0.68% as of March 23, 2022.

Two-Year Technical Price Chart (as of March 23, 2022). Source: REFINITIV; Analysis by Kalkine Group

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.