Palantir Technologies (PLTR) - Get Report shares rose after the provider of data-analytics software received two buy ratings and three hold ratings from analysts who initiated their coverage of the stock.
The buy ratings came from Morgan Stanley’s Keith Weiss and Jefferies’ Brent Thill, who both offered a share-price target of $13. The holds came from Goldman Sachs, RBC and Credit Suisse.
Palantir began trading Sept. 30, after its initial public offering. It has gained 3% since then and recently traded at $9.62, up 1.4%. Palantir's reference price in its direct listing was $7.25.
Morgan Stanley’s Weiss wrote in a commentary that its growth has "positively inflected at about $1 billion run-rate revenue, a feat rarely seen in enterprise software.”
Investors aren’t pricing in the company’s rising growth and widening profit margins, he said.
Both government agencies, which make up much of Palantir’s client base, and companies are concerned about "connecting, integrating and organizing data hidden within siloed, disparate legacy systems. to make better decisions, drive better outcomes and build better applications."
Jefferies’ Thill wrote in a commentary, "PLTR's data platform is highly unique and often deployed for mission-critical use cases that no other vendor can address." He likes Palantir's "balance of revenue/profitability growth.” His base case is for revenue growth of 31% next year and 24% in 2022.
To be sure, the Denver company’s top 20 accounts provide two-thirds of total revenue - a concern, Thill said.
Morningstar analyst Mark Cash is bullish on Palantir and says it’s undervalued.
“Palantir is well suited to help organizations consolidate and harness the power of data,” he wrote last week. Cash puts fair value for Palantir’s stock at $13.