Palantir (NASDAQ:PLTR) has made a habit of delivering strong earnings reports that have kept momentum up for this AI high-flyer. The big data specialist’s Q1 results and outlook featured another set of outperforming metrics, but this time around it was not enough to impress investors.
The company generated revenue of $883.85 million in the quarter, amounting to a 39.3% increase vs. the same period last year, while beating the forecast by $21.72 million. Growth was fueled once again by its expanding AI offerings, particularly in the booming U.S. commercial sector. On the earnings front, adjusted EPS landed at $0.13 – in line with Wall Street’s forecast.
The outlook was strong too. Palantir raised its full-year revenue guide to a range of $3.89 billion to $3.9 billion, up from the prior $3.74 billion to $3.76 billion, and ahead of the $3.75 billion analysts were projecting. The company also increased its forecast for adj. operating profit to between $1.71 billion and $1.72 billion, compared to its earlier forecast of $1.55 billion to $1.57 billion.
Yet, despite the solid showing, Palantir shares tumbled 12% following the report. Goldman Sachs analyst Gabriela Borges has an idea why.
“In our view,” said Borges, “the stock reaction is a smaller beat vs. prior quarters (4 quarter average of 4%) and elevated expectations given outperformance/valuation into the print (+67% over 1m and 2.2x EV/sales/growth vs. peers at 0.5x).”
However, the analyst remains confident Palantir is “well positioned to continue to deliver best-in-class growth,” citing rising demand for enterprise AI, the U.S. government’s ongoing push for tech-driven efficiency, and the expanding use of Operation Warp Speed among newer defense players, established contractors, and manufacturers more broadly.
But as for scooping up shares after the drop? Borges advises caution for now.
“Our positive view of Palantir’s growth is balanced by longer term ecosystem risks (the industry moving from peak custom to more off the shelf adoption) and the stock’s premium valuation,” Borges summed up.
Bottom line, Borges rates PLTR shares as Neutral, although she raised her price target from $80 to $90. Nevertheless, the new figure suggests the stock is still overvalued by 17%. (To watch Borges’ track record, click here)
Most other analysts also remain on the sidelines. Based on a mix of 8 Holds, 3 Sells, and 2 Buys, the stock claims a Hold consensus rating. The $89.17 average price target closely resembles Borges’ objective. (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.