Palantir Technologies (PLTR) posted one of its strongest quarters to date, but Raymond James analyst Brian Gesuale is not yet ready to upgrade his rating. Despite impressive Q2 metrics and bullish guidance, the five-star analyst reiterated a Hold rating, citing valuation concerns.
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Analyst Impressed with PLTR’s Financials
The company beat Q2 expectations across the board and reported strong revenue growth, especially in its U.S. commercial business, which jumped 93% year-over-year. Key financial metrics such as adjusted earnings and free cash flow also came in well above forecasts, and Palantir raised its full-year guidance, reflecting strong momentum.
Further, the analyst noted that Palantir gained traction with both new and existing customers. It closed $843 million in U.S. commercial contracts in Q2, up 222% from last year, and its top 20 customers are spending more, averaging $75 million each over the past 12 months.
Gesuale praised Palantir’s operational momentum and clear strategy, noting the company is achieving a Rule 40/50 metric of 94. He also highlighted Palantir’s ambition to grow revenue tenfold while reducing headcount.
But There Is a Catch
The analyst views Palantir stock’s valuation as fairly valued for now. He said Palantir stock’s valuation has skyrocketed, from 7x sales in 2023 to 74x sales currently, making it hard to justify buying at current levels.
For now, Gesuale is waiting for the stock to “grow into” its premium. He believes the company’s growth is impressive and says the stock could go much higher if even half of its ambitious goals are met.
Is PLTR a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on Palantir stock based on four Buys, nine Holds, and four Sells assigned in the past three months. The average PLTR stock price target is $108.27, implying a downside potential of 23.91%.
