Palantir (PLTR) is a divisive name on Wall Street. The bull-case rests on the big data specialist’s ability to expand its offerings beyond large government/enterprise contracts which have historically generated the bulk of the company’s revenue. The bear case is driven by an argument its high-end offerings are generally unsuitable for smaller companies who are already well served and that ultimately with government contracts slowing down, the company won’t be able to meet its growth objectives.
Evaluating the company’s prospects, Piper Sandler’s Weston Twigg belongs in the former camp.
“We view PLTR as a high-growth company with a rapidly expanding customer base,” said the 5-star analyst. “While controversial, we believe growth targets are achievable.”
So, what are those growth targets?
Through 2025, Palantir has set its sights on annual revenue growth of at least 30% but is that within the company’s reach?
Given “strong recent traction” – the company showed 41% growth in 2021 – a large and continuous expansion of the sales team – more than 150 salespeople came on board last year with another 200 anticipated this year – and “rapid commercial growth” – U.S. commercial revenue saw a 102% uptick in 2021 and in 2022 is anticipated to double again – Twigg thinks the company is “likely to achieve this goal.”
While the sales efforts so far have been focused on the US, Palantir is pushing hard on international commercial expansion. New deals with Merck KGaA, Peugeot, and Hyundai Heavy Industries were recently announced and the company is on a global hiring spree, recruiting salespeople in France, the U.K., Spain, Italy, Germany, Switzerland, South Korea, the Middle East, amongst other places.
There are other appealing elements. Russia’s invasion of Ukraine could be an “accelerator of U.S. and international government adoption.” Additionally, the stock has retreated considerably from the peak attained in early 2021. And by considerably, we’re talking of a 72% drop here, making the valuation “more reasonable.”
As such, Twigg initiated coverage of PLTR stock with an Overweight (i.e., Buy) rating and $15 price target, suggesting shares have room to climb 29% higher in the year ahead. (To watch Twigg’s track record, click here)
Twigg’s assessment, though, is not a popular one on Wall Street. 1 other analyst has a positive take, while 4 remain on the sidelines and 3 others recommend to Sell, all coalescing to a Hold consensus rating. That said, most appear to think the stock is undervalued; given the average price target clocks in at $13.75, the shares are anticipated to gain 18% over the next 12 months. (See Palantir stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
