Palantir Stock Price up 11% in June – Good time to Buy PLTR Stock?

Palantir (PLTR) stock is looking strong and is up almost 11% so far in June. Is it a good time to buy Palantir stock now?

Palantir opted for a direct listing to go public in 2020. Asana had also opted for a direct listing. This year, Roblox went public through a direct listing after having shelved plans for a traditional IPO last year. In a direct listing, the company going public does away the investment bankers and the selling shareholders sell the shares directly on the exchange. The flip side of a direct listing is that under the current rules, the company cannot raise capital and only the selling shareholders can sell their shares.

Palantir stock technical analysis

Palantir stock was trading in a narrow price channel between the 10-day SMA (simple moving average) and the 100-day SMA. However, the stock has crossed broken above the price channel and now trades above the 10-day, 50-day, and 100-day SMA. It is however getting near the overbought territory with a 14-day RSI (relative strength index) of 64.7. RSI values above 70 signal overbought positions.

67% of all retail investor accounts lose money when trading CFDs with this provider.

Recent developments

Palantir has been signing several new contracts since it went public. Last week, the company announced that it has been contracted by the US FAA (Federal Aviation Administration for providing a data analytics tool. The partnership will help advance the FAA’s modernization objectives for aviation safety.

Last month, PLTR announced that the “United States Special Operations Command (USSOCOM) to continue its work as their enterprise data management and AI-enabled mission command platform as part of the Mission Command System/Common Operational Picture program.” The contract is valued at a total of $111 million.

Last month, Palantir also reported its first-quarter 2021 earnings which showed revenues rising 49% year-over-year to $341 million. The company’s revenues from the US government increased 83% while US commercial revenues increased 83% over the period. While it posted a GAAP loss it generated adjusted free cash flows of $151 million in the quarter which is a yield of an impressive 44%.

PLTR stock forecast

Of the nine analysts covering PLTR stock, only two have a buy rating. Four analysts rate it as a sell while the remaining three rate Palantir as a sell or some equivalent. The stock’s consensus target price of $20.75 implies a downside of 18% over current prices.

Brokerages have been turning bearish on Palantir stock and several slashed their target price after the first-quarter earnings release. Wolfe Research maintained its market perform rating on Palantir but lowered the target price from $23 to $20. RBC also lowered its target price from $27 to $20. Jefferies made even deeper cuts to its target price and cut it by $12 to $28. Currently, Goldman Sachs is the most bullish brokerage on Palantir with a target price of $30. However, even it has lowered its estimates for the stock.

Palantir long term forecast

During the earnings release, 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.

Future drivers

Palantir is among those companies that accept bitcoins as payments. The company is also open to the idea of investing in bitcoins. Earlier this year, Tesla also invested $1.5 billion in bitcoins and sold 10% of these in the quarter. It also started to accept bitcoins as a payment method but later backed out after its CEO Elon Musk said that bitcoin mining is fossil fuel heavy.

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 at least six SPACs (special purpose acquisition companies. 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”

PLTR stock valuation

Palantir trades at an NTM (next-12 months) EV (enterprise value)-to-revenue multiple of 28.8x. The multiples are in line with its average multiples since it went public in 2020. While the multiples might sound high, given the moat and the strong growth, they look reasonable. The stock can be a good long-term investment at current prices.

67% of all retail investor accounts lose money when trading CFDs with this provider.