A major catalyst is on the way for Palantir (NYSE:PLTR) stock, as the big data analytics company will report its second-quarter earnings on Monday, Aug. 5, after the market closes.
Citi has expressed caution concerning the software industry in recent months, although it believes that Palantir will be able to beat on earnings. Citi expects the company’s commercial arm to perform well despite “government uncertainty.”
This conclusion was reached after Citi visited Palantir’s headquarters to speak with management. During the meeting, management expressed confidence in government contract revenue for the long term despite some short-term tailwinds.
“Government contracts still seem depressed though our conversations with management highlighted confidence for acceleration in the long-term, but expressed some caution near-term,” said Citi. “Recent government data in figure 19 indicates a steep decline of more than 60% driven by a DOD contract which might had included some catchup payment last 2Q.”
PLTR Stock: Citi Raises Price Target to $28
Citi also believes that Palantir’s AI Platform (AIP) will be able to gain momentum. These factors resulted in Citi raising its price target to $28 from $25.
For the second quarter, analysts expect revenue growth of 22.34% to $652 million. Adjusted gross profit is expected to jump by 26.18% to $538 million, the largest year-over-year growth since the second quarter of 2022.
As for EPS, Palantir is expected to bring in 3 cents compared to 1 cent a year ago. During the past three quarters, Palantir has beat EPS estimates twice while meeting them one time.
Jefferies also raised its price target to $28 this morning from its prior target of $24 while reiterating a “hold” rating. Analyst Brent Thill pointed out Palantir’s generous valuation at 19x expected sales for the cyclical year 2025, making it the “most expensive name in our coverage.”
At the same time, Palantir’s past few quarters have been strong, with Thill characterizing the company as a “rare blended AI apps/infra asset with NT rev momentum.”
Across the board, analysts have an average price target of $23.07. The highest is at $35, while the lowest is $9. However, PLTR stock is down about 3% today.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
