Sign InPalantir (PLTR) Shows Mixed Signals, Maintaining 'Hold' Recommendation
Summary
Palantir Technologies Inc. (PLTR) saw a drop in its stock price on July 27, 2023, but with recent profitable quarters and positive responses to a partnership with J.D. Power, there may be potential for short-term bullish momentum, although long-term prospects indicate potential downside, making it a 'Hold' for now.
Introduction
Palantir Technologies Inc. (Ticker: PLTR) saw its last close on July 27, 2023, at $16.15, representing a drop of $0.28 (-1.70%) from the previous trading session. This marks a movement between a price low of $16 and a price high of $17.19. With a market capitalization of $34.21 billion and a daily traded volume of 49.57 million shares, compared to an average volume of 80.93 million shares, PLTR is a significant player on the NYSE.
Technical Analysis
The stock's technical indicators provide some mixed signals. At 57, the 14-day relative strength index (RSI14) is on the higher end, suggesting that the stock may be overbought and at risk of a price correction. However, the moving averages tell a slightly different story.
The stock price is currently trading above both the 50 Day Moving Average (DMA) of $14.88 and the 200 DMA of $9.57, implying a strong uptrend that could signal potential price growth. Meanwhile, the 3-month Moving Average Convergence Divergence (MACD) of 0.7738 is also a positive sign of momentum in the stock's price movement.
Financial and Fundamental Analysis
On the fundamental side, Palantir currently has negative earnings per share (EPS) of $-0.12, resulting in a negative price-to-earnings (PE) ratio of -134.58. This shows that the company isn't currently profitable, reflecting potential risk in the stock's performance.
However, recent news suggests that the company may be turning a corner. Palantir has reportedly delivered consecutive profitable quarters, with an expectation to maintain profitability throughout the year. With multiple quarters of double-digit, year-over-year revenue growth, Palantir anticipates this positive trend to continue in 2023.
Palantir has also announced a partnership with J.D. Power, a noteworthy development that has already seen a positive response in the stock's price. This collaboration aims to facilitate new insights into the automobile industry.
The company's discounted cash flow (DCF) stands at $17.41, marked above its current price level, suggesting that the stock may be undervalued.
On the flip side, Palantir's shares have been flagged as potentially overvalued in a broader assessment of the growth stocks rally, suggesting some caution might be warranted.
Predictions for Future Performance
Given the recent profitable performances and projected growth trajectory, along with positive responses to the J.D. Power partnership, this could be a signal for potential bullish momentum in the short-term. Assuming the company continues on its profitability trend and there are no unexpected negative impacts from market factors, the price of PLTR might see a rise in the next trading day (July 28, 2023) and the following week.
However, long-term prospects appear to be a mixed bag. The consensus among given targets recommends a median price of $8, which is below the current stock price, indicating potential future downside.
The company's earnings announcement on August 7, 2023, will be pivotal in providing a clearer picture of Palantir's financial health and influencing its future stock price trajectory.
Evaluation and Recommendation
Despite some positive financial developments and technical indicators, the mixed reactions, combined with the negative PE ratio and other potential stock price downside, advocate for caution. Therefore, Palantir's PLTR is considered a 'Hold' at the moment. Investors should watch the market closely for further indicators and especially look out for the upcoming earnings announcement as it will play a significant role in shaping the stock's future direction.
