Palantir Technologies (PLTR)
Palantir Technologies just reported its earnings and nearly doubled its third-quarter revenue, but the shares still carry a valuation that depends on continued strong earnings growth.
Third-quarter revenue rose 96% year over year and 20% sequentially to $2.31 billion. U.S. commercial revenue increased 148% to $984 million, surpassing U.S. government revenue for the first time. Government revenue also grew 96% to $953 million. GAAP diluted earnings were $0.44 per share, and net dollar retention reached 165%, up eight percentage points from the previous quarter. The retention figure indicates substantial expansion among existing customers. Management raised its full-year outlook to imply approximately 91% total revenue growth and 143% U.S. commercial revenue growth.
Palantir currently shows at roughly 159 times trailing earnings and 86 times forward earnings. The gap reflects expectations for substantial earnings growth. Even on forward estimates, the valuation leaves the stock sensitive to both earnings revisions and changes in the multiple investors are willing to pay. For illustration, a 20% decline in the forward multiple would require a 25% increase in expected earnings to keep the share price flat.
The current analyst consensus is a “Buy” rating across over 30 analysts, with an average 12-month target of $216 per share, which implies about 21% upside from the November 2nd close of $178.34.
Palantir’s current 14-day relative strength index was 37.7, the reading signals weak momentum while remaining above the conventional oversold threshold of 30. The stock closed below its 50-day moving average of $186.87 and above its 200-day average of $153.57. A sustained move above the 50-day average would indicate improving near-term momentum.
The fundamental view for the stock is currently bullish, while the valuation and technical signals warrant caution, but for more upside the company needs continued commercial expansion and upward earnings revisions to support the premium. Slower customer expansion or a lower valuation multiple could pressure the shares even if revenue keeps rising. The next earnings update should show whether commercial growth is producing enough incremental profit to support the market’s expectations, and support the higher valuation models.
STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.
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