Palantir (NYSE:PLTR) stock is trading 3% higher today following an initiation of coverage by investment firm Raymond James. Analyst Brian Gesuale assigned PLTR stock a “strong buy” rating and a price target of $20. This price target implies upside of more than 90% from current levels.
Since the beginning of the year, shares of PLTR have lost over 40% of their market capitalization. However, the company recently confirmed that it will report second-quarter earnings on August 8, before the market opens. Shareholders are hoping the release will propel the stock higher.
Analysts on average expect Palantir to post revenue of $470.93 million for Q2 with earnings per share (EPS) of 3 cents. Further, for Q3, analysts also expect revenue of $507.04 million and an EPS figure of 5 cents.
With that in mind, let’s get into the details of the analyst upgrade.
PLTR Stock Given Price Target of $20 By Raymond James
Gesuale characterizes PLTR stock as a “cultural unicorn” with a large addressable market worth $120 billion. This is due to its three platforms that provide software solutions to government and commercial clients around the world.
Further, the analyst believes that the risk/reward for Palantir is attractive, given that shares have “fallen 75% from the peak seen in early 2021.” He points out that the company possesses a roughly 30% revenue growth rate and a gross margin structure of about 80%. Gesuale adds:
“The company then nearly doubled its revenue from 2018 to 2020, crossing the billion dollar sales mark, and we believe the company will nearly double again and flirt with the $2B revenue mark in 2022.”
Other analysts are bullish on PLTR stock as well. Bank of America analyst Mariana Perez Mora gives the stock a price target of $13 and a “buy” rating. The analyst believes Palantir will likely benefit from facial recognition technology (FRT), citing a recent report. According to the Government Accountability Office, 18 out of 24 government agencies have begun to use FRT more frequently for law enforcement purposes, among other things.
Goldman Sachs analyst Gabriela Borges is more neutral on Palantir with a $10 price target. She chalks this target up to “limited visibility into the cadence of the business in any given quarte,” and a weaker macroeconomic environment. Borges also says the company’s stock-based compensation of 33% of sales is high compared to peers.
PLTR stock has an average price target of $10.92 among 13 firms with coverage of the company.
On the date of publication, Eddie Pan did not hold (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.