Palantir Technologies Inc. won itself a new fan with its latest quarterly results.
HSBC analyst Stephen Bersey upgraded the stock to buy from hold Friday, cheering the software company’s “accelerating” earnings and otherwise strong growth.
He sees further momentum ahead for Palantir
PLTR,
writing that revenue could increase by 20% to 22% over 2024 and 2025. That growth could be fueled by rising defense, counterterrorism and intelligence spending amid heightened geopolitical unrest.
Adjusted earnings per share, meanwhile, could jump 25% next year, Bersey said. Growth on the bottom line could outpace revenue growth on the heels of the company’s operating leverage, he added.
See also: Palantir’s CEO has this message for skeptics and believers alike
Palantir could also capitalize on the artificial-intelligence fervor, and management recently highlighted a new go-to-market strategy for the company’s Artificial Intelligence Platform, known as AIP. The company’s new bootcamps are helping to accelerate new-contract acquisition significantly.
“We believe the changed approach is likely to result in faster revenue growth and lower sales & marketing costs as a [percentage] of revenue,” Bersey said.
While Palantir shares were trading at a valuation multiple of 60.1 times estimated 2024 earnings as of the publication of Bersey’s note, double the multiple for the broader software sector, he said the premium is warranted given that Palantir is growing earnings more quickly.
Palantir shares were up 5% in midday trading Friday to just south of $19. Bersey upped his price target to $21 from $16 in his latest report.
The stock is up nearly 200% so far this year, while the S&P 500
SPX
has increased 14%.
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