S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Sports analytics may be outnumbered when it comes to artificial intelligence
Critical asset just had biggest fall on record (Ad)
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
South Korean doctors hold massive anti-government rally over medical school recruitment plan
Critical asset just had biggest fall on record (Ad)
What to watch for as China's major political meeting of the year gets underway
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Sports analytics may be outnumbered when it comes to artificial intelligence
Critical asset just had biggest fall on record (Ad)
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
South Korean doctors hold massive anti-government rally over medical school recruitment plan
Critical asset just had biggest fall on record (Ad)
What to watch for as China's major political meeting of the year gets underway
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Sports analytics may be outnumbered when it comes to artificial intelligence
Critical asset just had biggest fall on record (Ad)
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
South Korean doctors hold massive anti-government rally over medical school recruitment plan
Critical asset just had biggest fall on record (Ad)
What to watch for as China's major political meeting of the year gets underway
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case
S&P 500   5,137.08
DOW   39,087.38
QQQ   445.61
Lawyers who successfully argued Musk pay package was illegal seek $5.6 billion in Tesla stock
This is the #1 Stock to Buy for the AI Tidal Wave (Ad)
Chicago 'mansion' tax to fund homeless services stuck in legal limbo while on the ballot
Sports analytics may be outnumbered when it comes to artificial intelligence
Critical asset just had biggest fall on record (Ad)
Head Start preschools aim to fight poverty, but their teachers struggle to make ends meet
South Korean doctors hold massive anti-government rally over medical school recruitment plan
Critical asset just had biggest fall on record (Ad)
What to watch for as China's major political meeting of the year gets underway
Nobel laureate Muhammad Yunus is granted bail in a Bangladesh graft case

Palantir Falls Into The Hands Of Value Investors 

Palantir Falls Into The Hands Of Value Investors 

Key Points

  • Palantir's strong results were foreshadowed by others in the cloud-services industry. 
  • The company reaffirmed its full-year outlook and may draw positive comments from analysts. 
  • The valuation is high today but falls sharply relative to next year's consensus. 
  • 5 stocks we like better than Palantir Technologies

Palantir (NYSE: PLTR) is not precisely a “deep-value stock” relative to its price-to-earnings multiple but value is, as they say, where you find it. The stock is trading at a whopping high 165X its current-year earrings compared to much lower valuations for the broad S&P 500 and even competitors in the cloud services and security industry like Datadog (NASDAQ: DDOG). The salient point is the valuation falls to only 50X earnings relative to 2023 consensus estimates and the company could easily outperform based on some of the metrics within the FQ3 earnings report and signs within the industry, ie Datadog’s impressive 3rd quarter results. The takeaway is that Palantir’s shift toward commercial business is gaining traction and has opened the door to explosive growth and the leverage of scale. 

Palantir: Mixed Results No Indication Of Future Success 

Palantir reported a mixed quarter for Q3 but that is only in relation to the analyst's estimates. The company brought in $477.8 million in consolidated revenue for a gain of 21.9% over last year and a company record. The revenue also beat the Marketbeat.com consensus but there was some weakness on the bottom line. The gains in revenue were driven by US business, up 31%, with notable strength in the commercial segment. US Commercial revenue increased by 53% compared to a smaller 23% increase in the core government segment. Within that, the customer count grew by 66% across all segments, 11% sequentially, with commercial customers growing nearly 125%. 

The bottom line results are mixed compared to the analyst's estimates with adjusted EPS of $0.01 missing by $0.01 but there is good news here as well. The operating loss improved by 1000 basis points as a percentage of revenue while the adjusted operating margin came in at 17%, cash flow margin at 10% and adjusted free cash flow margin at 8%. Turning to the guidance, the company is expecting to see these improvements continue into the end of the year and are reaffirming the full-year revenue guidance while increasing the adjusted income guidance to be in line with consensus. 


Assuming the company is able to keep growing and leverage its growth the 2023 consensus figures for earnings could be too low. As it is now, the analysts are expecting to see YOY growth accelerate to nearly 25% in 2023, up 1% to 2% from 2022). 

The Analysts Are Warming To Palantir

The analyst's activity in Palantir has been as mixed over the past year and there are two important takeaways. The first is that sentiment is warming from a weak Hold to a Firm Hold while the second is the price target is falling. The price target is down more than 50% YOY but it may start firming as well now the Q3 results are in. The current consensus is near $12.75 which implies about 60% of upside for the stock even with the big decline in expectations but the most recent activity has it trading in a range of $6 to $10. That range makes the stock fairly valued near $8 where it has been showing signs of a bottom. 

The Technical Outlook: Palantir Hits A Floor 

The price action in Palantir hit a floor near $7.50 and it looks like it could hold but there is some risk. The stock is moving lower in premarket action and could return to retest support or even set a new low before moving sideways or higher. While attractive, the market has yet to show real interest at these price levels so waiting for a clear signal may be the best bet. Longer-term, Palantir stock should move higher as it grows and improves profitability. 

Palantir Falls Into The Hands Of Value Investors 

→ Critical asset just had biggest fall on record (From Stansberry Research) (Ad)

Should you invest $1,000 in Palantir Technologies right now?

Before you consider Palantir Technologies, you'll want to hear this.

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While Palantir Technologies currently has a "Reduce" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Datadog (DDOG)
3.9094 of 5 stars
$130.22-0.9%N/A1,085.17Moderate Buy$128.18
Palantir Technologies (PLTR)
2.8373 of 5 stars
$24.93-0.6%N/A277.03Reduce$16.71
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


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