Palantir Technologies Inc. has managed to silence some of its skeptics with its recent financial results, triggering a surge in its stock towards its most significant single-day gain on record.
Following Monday's earnings report, at least two analysts who were previously bearish on Palantir's stock have shifted their positions to neutral. They acknowledged the momentum in the company's U.S. commercial business, which has experienced a boost from the implementation of artificial intelligence (AI) applications.
Citi Research analyst Tyler Radke highlighted the growing strength of Palantir's U.S. commercial business, describing it as increasingly difficult to overlook. Despite the company only slightly exceeding total revenue expectations by 1%, Radke emphasized "exceptionally strong" leading indicators, such as a noteworthy 54% year-over-year growth in total billings. He acknowledged that these figures were against what he considered easy comparisons. Radke was particularly impressed by the sustained profitability strength, noting that earnings per share exceeded the consensus view by 35%, and free cash flow surpassed estimates by 62% for the fourth quarter. Consequently, he upgraded Palantir's stock from sell to neutral on Tuesday and doubled his price target to $20.
In Tuesday morning trading, Palantir's stock had surged by 27%, poised to achieve its highest single-day percentage gain on record.
Jefferies analyst Brent Thill also abandoned his bearish position, citing the faster-than-expected ramp-up of the AI Platform (AIP) as a reason for the shift. He upgraded his rating from underperform to hold, highlighting the momentum in AIP deals. However, Thill expressed lingering valuation concerns, noting that Palantir's stock trades at a significant premium compared to other large-capitalization software companies.
BofA Securities analyst Mariana Perez Mora expressed enthusiasm about Palantir's latest results, particularly praising the early-stage success of AIP. She noted a 70% increase in revenue for Palantir's U.S. commercial business in the latest quarter. Mora viewed this substantial growth as indicative of Palantir's unique role in enabling AI-powered, data-driven decision-making in a tangible, accessible, and operational manner. Despite the positive sentiment, she maintained a buy rating and raised her price target to $24 from $21.
However, William Blair's Louie DiPalma remained bearish, predicting that Palantir's shares would revert to their recent downward trend after the initial earnings surge. DiPalma pointed out that Palantir's U.S. commercial business only contributes about a fifth of its total revenue, and in his assessment, the other divisions continue to face challenges.
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