Shares of Palantir (NYSE:PLTR) are down by about 14% after the big data analytics company reported its first-quarter earnings. Simply put, the numbers were good. However, PLTR stock is still falling due to its oversized valuation, meaning that shareholders got good but were expecting great.
“Results were solid, but we believe investors are focused on the multiple with the stock trading at 16 [times 2024 revenue] (highest in our universe) and up 47% [year-to-date] into the print,” said Jefferies analyst Brent Thill.
During the quarter, revenue increased by 21% year-over-year to $634 million, driven by commercial growth of 27% and government growth of 16%. That beat the analyst estimate for $625 million. Furthermore, Palantir reported GAAP income from operations of $81 million, marking the company’s fifth straight quarter of GAAP operating profitability. Palantir was also profitable on a GAAP EPS basis, reporting 4 cents per share.
Guidance was also raised. The company now expects 2024 revenue between $2.677 and $2.689 billion, up from its prior guidance of between $2.652 and $2.668 billion and in line with the analyst estimate of $2.68 billion. Q2 revenue guidance for between $649 and $653 million topped the analyst estimate of $643 million.
PLTR Stock: Deutsche Raises Price Target to $20
Following the report, Deutsche Bank analyst Brad Zelnick raised his price target to $18 from $20, although he maintained his “sell” rating. Zelnick noted that Deutsche would continue to remain on the sidelines with PLTR given its valuation and “until we can gain more confidence in the sustainability of AIP’s competitive positioning vs. the long list of established vendors vying for this business and as in-house IT teams move up the AI learning curve.”
Valuation is a major concern for several analysts. For example, Citi analyst Tyler Radke raised his price target to $25 from $23 but maintained a “neutral” rating due to PLTR having one of the highest enterprise value to sales ratios within the software industry.
On the other end of the Street, RBC Capital analyst Rishi Jaluria raised his price target to $9 from $5 but cautioned that PLTR’s high multiple skewed the stock’s risk/reward profile to the negative. Jaluria also maintained his “underperform” rating.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
