Palantir Stocks Soar on UBS Analysis and Military Contract Agreement
Palantir Technologies Inc. (NASDAQ:PLTR) shares rose by 3% following UBS's initiation of a new analysis and news of an expanded partnership with the U.S. Army. This recovery came after a 3.9% drop on Wednesday, influenced by the market's reaction to hawkish comments from the Federal Reserve.
UBS analyst Karl Keirstead initiated coverage of Palantir with a Neutral rating and an $80 price target. The analyst noted a very positive outlook on the company's fundamentals and stated that the revenue growth projections for 2025/2026 are 200 basis points above market expectations. Keirstead's assessment is based on discussions with 17 major Palantir customers aimed at clarifying the core functionalities the company offers and the potential increase stemming from exposure to AI-Data. Despite the positive forecast, Keirstead mentioned that the company's current valuation is a factor for a neutral stance. He indicated that Palantir is trading at 49 times its 2025 estimates for revenue and 124 times for free cash flow, which he finds difficult to justify.
In a separate development, Palantir announced the expansion of its long-standing partnership with the U.S. Army. The deal, valued at approximately $400.7 million over four years, with a ceiling value of $618.9 million, supports the Army Data Platform (ADP) through the Army Vantage capability. This agreement highlights Palantir's ongoing role in providing data analytic solutions to the military sector and may contribute to investors' confidence in the company's ability to secure significant government contracts.
The UBS analyst remarked, "The 2025/2026 estimates are significantly above market expectations (+200 basis points in revenue growth) and there is a very positive view of the fundamentals." This comment reflects the analyst's confidence in Palantir's strong future revenue growth and core business strengths, despite a cautious stance on valuation.
Investors appear to have reacted positively to the combination of UBS's analysis and the significant Army contract, leading to the rise in Palantir's share price today. As the company continues to maintain its position in the competitive data analytics market, these developments could be critical in shaping its financial trajectory and market valuation.