Palantir Stock Price Rises 5.7% – Time to Buy PLTR Stock?

Palantir (PLTR) stock rose 5.7% yesterday and is now up 22.7% for the year. The stock is outperforming the S&P 500 this year even as it is down over 36% from its 52-week highs.

PLTR had gone public last year only opting for a direct listing instead of a traditional IPO as well as the SPAC (special purpose acquisition company) route that has become quite popular over the last year. What’s the forecast for Palantir stock and is it a good time to buy the stock?

Palantir stock price technical analysis

Palantir stock is looking bullish on the charts and trades above the short-term as well as the long-term moving averages. The stock has found strong support at the 200-day SMA (simple moving average) and currently trades above the price level. Its MACD (moving average convergence divergence) also gives a buy signal.

PLTR stock has been in an uptrend over the last few trading sessions even as US stock markets have looked weak. However, after the recent rise, the stock has now started to look overbought with a 14-day RSI (relative strength index) of 70.4. RSI values above 70 signal overbought levels while RSI values below 30 signal oversold positions.

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PLTR stock price recent developments

Last month Palantir released its second-quarter earnings which showed that revenues increased 49% year-over-year to $376 million. The company’s commercial revenues in the US rose 90% during the period. During the quarter, the company closed 62 new deals valued above $1 million. Out of these 30 deals are above $5 million while 21 deals are above $10 million.

The company has been making several new deals that would help it scale up revenues in the long term. For the third quarter, PLTR gave 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%.

Palantir stock price forecast

Wall Street analysts are not very bullish on Palantir stock though. Of the eight analysts covering the stock, only one rates PLTR as a buy while four 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 12.7% downside over current prices. The stock’s street high target price of $31 is a premium of 8.3% while the street low target price of $18 is a discount of 37.1% over current prices.

Last month, after PLTR’s earnings release, several analysts had raised their target prices. RBC and Wolfe Research raised their target price to $25 while maintaining a neutral rating. Morgan Stanley has also raised the target price from $19 to $22 while maintaining its underweight rating. Jefferies, which is bullish on Palantir stock, also raised the target price from $28 to $30.

PLTR stock price long-term forecast

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.

The company has also started to accept payments in bitcoin and also invested money in gold last month to hedge itself from any black swan event. Palantir is also investing in several start-up companies which will offer long-term value. The company has invested as a PIPE (private investment in public equity) in several SPACs. These include Babylon Health, Wejo, and Lilium.

The company is entering these companies as a strategic investor. “We’re seeing an opportunity to back really good management teams with big visions,” said Kevin Kawasaki, Palantir’s head of business development. 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”

Analysts on PLTR stock

Jefferies analyst Brent Thill sees the SPAC investments as a long-term driver. “As deal flow has accelerated, the investor debate has turned to whether PLTR is ‘buying revenue’ given the mechanics of the program,” said Thill in his note.

He expects the revenues from investments to account for 5-6% of the company’s commercial sales. He added, “We do believe that PLTR’s commercial initiatives aim to bring its platform to the mass market and that this will take years (not quarters) to execute.”

Palantir stock price valuation

Palantir stock currently trades at an NTM (next-12 months) EV (enterprise value)-to-revenue multiple of 31.3x. The multiples have averaged 27.7x since it went public and peaked at 50.4x. The valuations might appear high but it reflects the optimism towards the company’s business outlook.

If you are looking to play the Big Data industry over the medium to long term, PLTR looks like a good stock to buy.

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