- Palantir reports blowout third quarter and ups guidance
- Stock jumps 13% premarket
- PE valuation hits triple digits
US hot stock Palantir Technologies (PLTR:NYSE) continued its unrelenting rally after blowout third quarter earnings as the data analytics company continues to ride the AI (artificial intelligence) wave.
Racking up new business wins and raising full year guidance, Palantir stock jumped more than 13% in premarket trading Tuesday (5 Nov), a move that puts the stock’s 2024 gains at 150% so far.
WHAT THE NUMBERS LOOKED LIKE
For the three months to 30 September, Palantir reported adjusted earnings of $0.10 a share on revenue of $725.5 million. That compared with analyst estimates for adjusted EPS of $0.09 on revenue of $703.4 million. Revenue surged 30% year-on-year.
Customer count grew 39% year-on-year, driven by increased AI demand. ‘We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down’, the company said.
But what really excited the markets was management’s optimism that this surge in AI demand will mean bigger revenues and profits in the quarters ahead. For 2024 (to 31 Dec), the company is now guiding for revenue in the range of $2.805 billion to $2.809 billion, up from a range of $2.742 billion and $2.75 billion.
For Q4 alone, Palantir anticipates an extra $25 million to $30 million extra income, guiding between $767 million and $771 million, compared with analyst estimates for $742.3 million.
ANALYST REACTION
‘There's no denying that Palantir is deserving of a premium valuation’, wrote Mizuho analyst Gregg Moskowitz in a note. Yet the analyst accepts valuation concerns.
‘We find it increasingly difficult to justify Palantir’s high multiple that in our view already discounts significant acceleration versus consensus expectations’, the analyst wrote. Mizuho upped its target price on the stock from $30 to $37 yet that still implies more than 20% downside from premarket indications of $46.64.
Stockopedia data had the stock trading on a 12 month rolling price to earnings multiple of 98.5 ahead of the quarterly report and share price jump.
Morgan Stanley analysts removed their Underweight rating and $20 price target on Palantir shares following the strong report. It’s sharply negative view of the stock was predicated on maturing government growth lagging commercial traction, and limited free cash flow revision potential ahead.
That is no longer the case. ‘The trendlines extending into this quarter prove stronger than expected, highlight the company’s AI positioning, and rare profile’, they added.
