Palantir (NYSE:PLTR) stock is set to make a major leap, with its shares joining the ranks of the S&P 500 Index. As announced last Friday, Palantir will officially start trading as part of the index on Monday, September 23rd.
For Bank of America’s Mariana Perez Mora, a 5-star analyst ranked in the top 2% of Wall Street stock experts, this moment marks a strong vindication. She draws a parallel with the way Palantir is looked at right now to how wrong the prognosticators were back in 1980.
That year, AT&T commissioned a consulting firm to predict the size of the cell phone market by 2000. The firm estimated just 900,000 users, vastly underestimating the actual number, which surpassed 100 million mobile subscriptions by then. These early forecasts also failed to anticipate the rise of apps, streaming, and smart devices.
“We view Palantir’s capabilities, technology and path forward facing a similar fundamental misunderstanding,” Perez Mora opined.
The top analyst makes the case Palantir’s Ontology establishes a “unique ecosystem” that unlocks the value of data and automation to help with decision-making. Perez Mora counts Palantir as a crucial enabler for the safe and secure deployment of machine learning, AI, and emerging data science technologies, including the imminent advancements in quantum computing.
Now, with the company getting a place on the benchmark index, Perez Mora thinks this “watershed moment” could offer institutional investors a chance to “revisit what they ‘know’ about PLTR.”
Being included in the S&P could also significantly reduce the stock’s volatility. The inclusion is likely to attract a larger pool of institutional investors, both passive and active, thereby providing greater stability and liquidity for the stock.
Although institutional ownership in Palantir has increased by 6 percentage points over the past year, it remains notably below the average level of S&P 500 companies. Furthermore, the top five institutional shareholders account for roughly 20% of the total shares outstanding, suggesting there is ample room for new institutional investors to “explore the name.”
So, down to the nitty-gritty, what does this all mean for current investors? Perez Mora rates PLTR shares a Buy, while boosting her price target from $30 to a Street-high of $50, implying the stock will rise by 43% over the coming months. (To watch Perez Mora’s track record, click here)
That’s a bull’s take but others on the Street have a more cautious view of Palantir’s prospects; the stock only claims a Hold (i.e. Neutral) consensus rating, based on a mix of 4 Buys, 5 Holds and 6 Sells. Meanwhile, the $27.08 average price target factors in a one-year decline of 22%. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
