Palantir Technologies shares sunk on Tuesday as investors digested its earnings report.
The data-analytics software company is focusing on its artificial-intelligence ambitions but slowing revenue growth is a concern .
Palantir
(ticker: PLTR) boosted guidance with its second-quarter report, but it wasn’t enough to sustain the rally for a stock that has more than doubled this year so far.
Palantir stock was down 8% in early trading Tuesday at $16.54. The shares had nearly tripled in value from Jan. 1 through to Monday’s close.
For the bulls, Palantir is just about to hit an inflection point with the introduction of its Artificial Intelligence Platform, or AIP. The company’s executives said on an earnings call that since the launch of the AIP ten weeks ago, there had been AIP “unprecedented” interest from customers.
Palantir also said in the second quarter that its number of customers rose 38% from the prior year, as it looks to increase its revenue coming from commercial clients compared with government contracts.
“We continue to believe Palantir is the gold standard in AI and are confident in the company’s efforts to expand into the commercial space while maintaining its massive government presence,” Wedbush’s Daniel Ives wrote.
Ives maintained an Outperform rating and a $25 price target on the stock.
However, for the bears, Palantir’s second-quarter revenue growth of 13% from a year earlier might not look that impressive for a company which is trading at 81 times its expected earnings this year, according to FactSet.
“The company still has significant work to translate AI demand to growth acceleration,” D.A. Davidson’s Gil Luria wrote.
Luria noted Palantir only raised its full-year revenue guidance by $2 million and its remaining performance obligations—contracted revenue which hasn’t yet been recognized—was down 20% from the same period a year earlier.
Luria raised his target price on the stock to $15 from $8.50 but kept a Neutral rating. He said the new target represented an enterprise value-to-revenue multiple of around 13 times for the current year, in line with high-growth profitable peers.
Analysts at William Blair noted revenue growth was down from an 18% rise in the first quarter and kept an Underperform rating on the stock.
“Palantir’s deceleration continues a long-term trend as revenue growth peaked at 49.9% in the second quarter of 2021,” William Blair’s Louie DiPalma wrote.
Write to Adam Clark at [email protected]
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