• Palantir Technologies (NYSE:PLTR) stock is down approximately 26% from the end of 2021. However, the stock has started to pick up momentum again.
• PLTR is operationally strong. The Russia-Ukraine war has led the U.S. government to involve intelligence for potential cyberattacks.
• Investors should take this opportunity to buy an already beaten down PLTR stock.

Source: Spyro the Dragon / Shutterstock.com

Palantir Technologies stock has remained subdued even after a strong fourth quarter and full-year earnings release. Investors seem to be unimpressed by the decelerating revenue growth rate, especially in the government sector.

However, there is a catalyst for reversal in order intake for the government sector. The Russia-Ukraine war has posed several threats to nations. In a recent press release by White House, President, Joe Biden warned the U.S. for possible malicious cyberattacks. The President has urged companies to accelerate efforts to harden cybersecurity.

The news came on the heels of Russia’s digital attacks at the Ukrainian government and critical industry sectors.

Subsequently, the U.S.-based digital authentication firm, Okta (NASDAQ:OKTA) announced that it was affected by a security breach involving hacking group Lapsus$. Although the breach is not considered to have a major disruptive impact, cyber intelligence has been tightened.

The event has led investors to shift their focus on companies providing data intelligence. (PLTR stock gained 5% on the news).

The future prospects of data analytics appear bright as a large number of corporations and government agencies are deploying advanced software solutions to handle most complex problems and derive deep data insights to maximize returns. Palantir, although at a nascent stage, has built reliable solutions from siloed and unstructured platforms or data sets.

What’s Happening With PLTR Stock?

When Palantir started operating, its core business was providing intelligence to government sector. However, given limited amount of government contracts, venturing commercial space was imperative.

As the company has forayed in commercial space to provide data insights to large corporations, investors seem to doubt on the company’s capability and its future growth prospects.

Nevertheless, Palantir has been performing well in both these markets. In 2021, revenue in the government sector grew 47% year-over-year and it rose 34% in the commercial sector.

Specifically, the U.S. commercial segment gained significant software traction with revenues rising by 102% on a year-over-year basis. The U.S. commercial customer count increased 4.7x to 80 customers year-over-year. Overall, customer count tripled since last year to 147 customers in the commercial segment.

The company’s net dollar retention rate of 131% in 2021 is particularly impressive. The ratio shows that average existing customer spent 31% more during the year than last year. Both commercial (150%) and government businesses (146%) delivered strong retention rates, meaning most of the existing customers are investing in PLTR software at a higher rate.

Palantir also generated adjusted free cash flow of $424 million on revenues of $1.5 billion in 2021. This implies a free cash flow margin of 28%. Higher cash flows will allow the company to take stepped up growth initiatives and enhance its footprints in the addressable markets.

In terms of growth, the outlook for 2022 seems bright. The average annual earnings growth for the year is forecasted at 52.66%. Analysts surveyed by CNN Business estimate that sales will reach $2.6 billion by 2023. This is almost twice the level achieved in 2021.

Should You Buy PLTR Stock?

Palantir’s Q4 2021 and full-year results have been encouraging. Although, high stock-based compensation expense has been hindering its profitability, the company is on right track. Based on the customer retention rates and new contracts, the annual revenue growth forecast of 30% over the next four years looks achievable.

PLTR stock is currently trading at price-to-sales ratio of 14.21x, trailing twelve months. This valuation is lowest since late 2020. Given revenue growth forecast of 30%, valuation appears to be reasonable. Investors can consider taking long position on the stock from a long-term perspective.

On the date of publication, Sakshi Agarwalla did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.