Shares in Palantir Technologies (PLTR) surged higher today after a leading analyst said it was poised to benefit from President Trump’s cost-cutting drive.
Concerns Over Exposure Played Down
Four-star TipRanks-rated analyst Daniel Ives of Wedbush reiterated his outperform rating on the stock and its $120 price target. He said that the AI software company was poised to benefit from a more streamlined government spending under President Donald Trump given its “unique software value proposition.” Ives noted that there have been concerns over the impact of Trump’s new five-year cost-cutting plan on Palantir, led by CEO Alex Karp, given the company’s exposure to US government budgets and as the plan is estimated to cut defense spending by 8% per year or about $290 billion.
Just as a reminder Trump issued an executive order on February 26 to “commence a transformation in Federal spending on contracts, grants, and loans to ensure Government spending is transparent and Government employees are accountable to the American public.”
Palantir Positioned for Growth
However, Ives said Wedbush’s conversations with government contacts indicated that the plan’s focus on efficiency could actually be to Palantir’s advantage. “Palantir is so well-positioned for this new disciplined spending environment at the Pentagon and this will ultimately be a positive growth catalyst,” Ives said. He added that Palantir was also attached to high-priority contracts that are unlikely to get cut in Trump’s cost drive.
The note will come as some what of a relief for Palantir whose stock has plunged since hitting a record high on February 18. This led to a significant drop in purchases from retail investors who have been key in Palantir’s push forward in recent times.
Is PLTR a Good Stock to Buy Now?
On TipRanks, PLTR has a Hold consensus based on 4 Buy, 9 Hold and 5 Sell ratings. Its highest price target is $141. PLTR stock’s consensus price target is $93.13 implying an 4.11% upside.
