Palantir Stock Price Forecast November 2021 – Time to Buy PLTR Stock?

Palantir (PLTR) stock has recovered from its 2021 lows and is now up 10.4% for the year. However, the stock still trades way below the 52-week highs of $45 that it hit during the first quarter.

Palantir went public last year and opted for a direct listing. The direct listing reference price was $10. While the stock closed below that level on the first trading day, it has risen sharply since then. This year, Roblox and Coinbase also opted for a direct listing. What’s the forecast for Palantir stock and is it a good time to buy the stock?

Palantir stock recent news

Earlier this month, Palantir announced a partnership with global consulting firm AlixPartners. “Together, AlixPartners and Palantir teams will deploy the Foundry platform to help deliver enduring transformation across functions in some of the world’s most important commercial organizations,” PLTR said in its release.

Last month, Palantir announced that the US Army’s Program Manager for Intelligence Systems and Analytics has selected the company to deliver the US Army’s Intelligence data fabric and analytics foundation for the Capability Drop 2 (CD-2) program.

Palantir has been making several new deals that would help it scale up revenues in the long term. During the second quarter, the company closed 62 new deals valued above $1 million. Out of these 30 deals were above $5 million while 21 deals were above $10 million.

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PLTR earnings release

Palantir would report its third-quarter earnings tomorrow before the US markets open. Analysts polled by TIKR expect the data analytics company to report revenues of $386.46 million in the quarter, 33.6% higher than the corresponding quarter last year.

During the second-quarter earnings release, PLTR gave third-quarter revenue guidance of $385 million and an adjusted operating margin of 22%. In the second quarter, it reported an adjusted operating income margin of 31%. Analysts’ revenue estimates are slightly above the company’s guidance.

While Palantir is expected to post an adjusted net income of $78.3 million in the quarter, it is expected to post a GAAP loss in the quarter. The company has a generous stock-based compensation program. Last year, its stock-based employee compensation was $1.27 billion. It posted a net loss of $1.17 billion in the year.

While a lot of companies exclude stock-based compensation from the adjusted earnings, Warren Buffett is critical of the practice and believes that these are normal expenses that should be considered for arriving at real profitability.

What to watch in Palantir’s earnings?

During Palantir’s upcoming earnings, markets would watch the commentary on new deals in the quarter as well as the revenue guidance for the current quarter. Notably, PLTR surprised markets by announcing an investment in gold. During the third-quarter earnings call, the management might provide updates on its investing strategy.

Notably, apart from the core business, PLTR has also been investing in several SPACs (special purpose acquisition company) as a private investor. These strategic investments would add long-term shareholder value.

Commenting on these investments, Palantir’s head of business development Kevin Kawasaki said “We’re seeing an opportunity to back really good management teams with big visions.” He added that PLTR can “allow them to have our data operating systems platform that we’ve put 15 years and billions of R&D dollars into.”

Palantir stock forecast

Wall Street analysts are not very bullish on Palantir stock though. Of the nine analysts covering the stock, only one rates PLTR as a buy while five rate them as a hold. Three analysts rate the data analytics company as a sell or some equivalent.

PLTR has a median target price of $25 which is a 3.8% downside over current prices. The stock’s street high target price of $31 is a premium of 19.2% while the street low target price of $18 is a discount of 30.8% over current prices.

Earlier this month, Deutsche Bank initiated coverage on Palantir stock with a hold rating and $25 target price. Analyst Brad Zelnick pointed to the “strong technology platforms, mission-critical applications, and the robust market demand for AI / Analytics,” but expressed concern over the pricing and long-term business economics.

Palantir stock long term forecast

The long-term forecast for Palantir looks positive given the centrality of data in the new economy. Palantir said that it expects annual revenue growth in excess of 30% between 2021 and 2025. The projected growth looks strong and the company might surprise on the upside in terms of growth looking at the growing demand for data analytics, both from the public and the private sector. Analysts polled by TIKR expect the company’s revenues to rise 37.5% this year and 29.6% in the next year.

Should you buy PLTR stock

While there haven’t been many concerns about Palantir’s growth outlook, most analysts have been apprehensive about its valuations. The stock trades at an NTM (next-12 months) EV-to-sales multiple of 28.4x which might appear a bit stretched. However, data analytics is an emerging industry with a strong long-term growth outlook and PLTR has a competitive lead in the industry. While a section of the market is apprehensive about the company’s business with the governments, Palantir is unapologetic about the lucrative business.

Looking at the charts, Palantir trades above the 50-day and 100-day SMA (simple moving average). The stock has a 14-day RSI (relative strength index) of 55.4x which is a neutral indicator. All said, while there are valid concerns about PLTR’s valuation in the short term, the stock looks among the most compelling long-term investment opportunities.

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