Palantir Gets Upgrade to Buy at Goldman on Sales Guidance

Goldman Sachs upgrades shares of data analytics company Palantir to buy from neutral.
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Palantir Technologies  (PLTR) - Get Report shares rose Wednesday after Goldman Sachs upgraded the data analytics company to buy from neutral and lifted its share-price target to $34 from $13.

Goldman was pleased with Palantir’s fourth-quarter earnings report.

Palantir recorded a loss of 8 cents a share for the fourth quarter vs. a year-earlier loss of 29 cents. Analysts polled by FactSet expected a loss of 3 cents. But revenue was $322 million, up 40% from a year ago and ahead of analysts’ forecasts of $300 million.

Palantir shares traded Wednesday at $28.85, up 3.6%, and have tripled over the past six months amid enthusiasm for data analytics stocks.

Goldman analysts noted that EBIT came in 115% ahead of its estimates. 

“We were encouraged to see management guide to $4 billion of revenue in 2025, implying 30% compound annualized growth from 2020,” they said.

“With a growing backlog of $2.8 billion in deal value (up 31% year-on-year), we believe there is increasing visibility into the achievability of that long-term target. Also, we believe recent efforts to modularize Foundry and add channel partners like IBM should improve product market fit for the commercial business in the coming quarters.”

Further, “we have been impressed by the increased efficiency of the model, as the addition of sales reps has actually lowered customer acquisitions costs by reducing sales cycles through a greater understanding of customer needs,” the analysts said.

Other analysts also were positive on Palantir. Jefferies has a buy rating and a $40 price target. It said Palantir is in “rarefied air” among software companies.