Sign InPalantir Technologies (PLTR) Shows Strong Growth but Questions Remain About Valuation
Summary
Palantir Technologies Inc. (PLTR) has shown significant growth in the market, driven by strong earnings and high expectations, and has announced a crucial enterprise agreement with Babcock International, showing a focus on expanding its client and partnership base; however, the company's lack of profitability and negative P/E ratio raise concerns about its valuation, although ongoing developments and partnerships could improve future earnings, and joining the White House's AI Safety Pledge could enhance its brand image and regulatory goodwill; technically, the stock has shown volatility but has an upward trend in the longer term, though it may experience minor fluctuations around the support and resistance levels in the short term; analysts' consensus is Buy, with a higher DCF value indicating potential undervaluation, but target prices lower than the stock's last closing price; given the positive news sentiment, the stock may maintain its upward course in the upcoming week cautiously, considering the overbought RSI and negative MACD.
Fundamental Analysis
Palantir Technologies Inc. ('PLTR') has significantly grown in the market, as evidenced by its current market cap of $34.06 billion. The company's year-on-year growth reached nearly 150%, mainly driven by strong earnings and high expectations. As per recent news, it has announced a crucial enterprise agreement with Babcock International expected to enhance the company's data capabilities, demonstrating an ongoing focus on expanding its client and partnership base.
However, it is crucial to note that PLTR reported a negative EPS of -$0.02, indicating a lack of profitability at the moment. Furthermore, the trailing P/E Ratio is negative at -791.5, raising questions about the company's current valuation. The company's earnings announcement date has been set for November 6, 2023. Although Palantir is not currently profitable, the ongoing developments and partnerships could potentially improve their future earnings.
PLTR has also joined a list of prominent tech companies to take the White House's voluntary AI Safety Pledge, reflecting its commitment to ethical use of artificial intelligence technology. This could enhance their brand image and potentially drive future regulatory goodwill.
Technical Analysis
The stock closed at $15.83 on September 14, 2023, increasing by 1.47%. The company's recent performance has shown great volatility, with the stock price hitting a high of $20.24 and a low of $5.92 within the year. The average trading volume stands at 65.36 million, while the most recent trading volume was approximately 38.16 million shares.
The current price of the stock is slightly lower than the 50-day moving average of $16.17 but significantly higher than the 200-day moving average, suggesting a mixed trend in the short term but upward momentum over the longer term. Additionally, with the RSI14 at 66, the stock can be seen as nearing an overbought position which generally indicates a possible trend reversal in the future.
The MACD, a trend-following momentum indicator, is also negative at -0.45 over the past three months, which might suggest that the stock is currently on a downward trend.
The company exhibits a significant price range on a daily basis, as shown by the ATR of approximately 5.33, pointing out a high great deal of volatility.
Looking further at the price levels, PLTR has a noticeable support level at $15.79 and a resistance level at $16.30. This suggests the stock may bounce around these values in the short term.
Analysts Consensus
The stock has a discounted cash flow (DCF) value of $17.09, which is higher than the current price, indicating potential undervaluation. Moreover, the analysts' consensus is "Buy", with 7 rating it as a "Buy", 1 as "Hold", and 3 as "Sell". However, the target median price at $9.5 and the consensus target at $11 is lower than the stock's last closing price.
Stock Predictions
Given the detailed analysis, the expectation for PLTR stock for the next trading day (September 15, 2023) may show minor fluctuations around the support and resistance levels of $15.79 and $16.30, respectively, given the high volatility.
However, for the upcoming week, taking into consideration both fundamental and technical viewpoints, as well as the positive news sentiment, it can be expected that the stock may maintain its upward course albeit cautiously due to the RSI close to overbought levels and the negative MACD.
Final Evaluation
With significant growth prospects seen in Palantir’s ongoing AI efforts, strategic partnerships, and above-average industry performance, it can be potentially classified as a "Hold". Despite some mixed signals in the technical analysis and a slightly overbought RSI, the company has demonstrated solid growth potential and secured significant partnerships enhancing its fundamental outlook. Investors are encouraged to base their investment decision on their individual risk appetite and monitor PLTR’s stock performance for any significant changes in market conditions, company performance, or other economic factors.
