Faizan Farooque
1 min read
This article first appeared on GuruFocus.
Palantir Technologies Inc. (PLTR, Financials) is down approximately 19% from a record closing in October, however the business is still posting fast sales growth. Shares finished Tuesday at $168.82, down from their Oct. 9 high of $209.05.Palantir’s sales rose 96% from a year earlier to $2.31 billion in the third quarter, driven by increasing demand for its artificial intelligence software. U.S. commercial income climbed 148% to $984 million, topping U.S. government revenue for the first time.The business also boosted its full-year sales guidance to $8.530 billion to $8.534 billion, suggesting around 91% growth year-over-year.But a deeper study of its contracts indicates a different trajectory. Total contract value climbed only 6% year-over-year to $2.92 billion, compared to 49% rise last quarter.The value of U.S. commercial contracts likewise expanded at a much slower pace, rising from 153% in the second quarter to 11% in the third.That deceleration is important since Palantir’s valuation is extremely dependent on assumptions it would continue to grow rapidly.The stock trades at around 46.5 times forecast revenue, vs to 16 times for Snowflake and 13.5 times for Datadog. Wall Street is still split. The average analyst price objective is $229.09 . Jefferies has a target of $80.Palantir predicts sales in the fourth quarter of $2.649 billion to $2.653 billion, over the prior average estimate of $2.46 billion.The next test is what fourth-quarter numbers suggest about increased contract momentum and ongoing revenue growth.
