Sign InPalantir Technologies: Technical Strength, Fundamental Weaknesses, and Upcoming Earnings Announcement
Summary
Palantir Technologies Inc.'s stock shows strong technical indicators with a bullish pattern and notable upswing, but its fundamental analysis reveals negative EPS and a negative PE ratio, making it a potentially risky investment, therefore categorizing it as a 'Hold' with caution advised for investors. (July 28, 2023)
Introduction:
The analysis presented delves into the technical and fundamental aspects of Palantir Technologies Inc. (Ticker: PLTR), listed on the NYSE. It commences by examining key stock specifications and metrics before diving into news events that can influence the company's stock units.
Technical Analysis:
As of July 28, 2023, Palantir’s stock closed at $17.81, showing a robust increase of 10.28% or $1.66 from its previous position. It traded within the range of $16.74 - $17.97 for the day. Cumulatively, this puts the stock somewhere between its 52-week lows and highs of $5.92 - $18.99 respectively. With these figures, Palantir has managed an admirable recovery from its year low.
The Relative Strength Index (RSI14) of 62 indicates a bullish pattern, suggesting recent buyer enthusiasm in the market that has outpaced seller pressures. The stock's MACD value of 0.83 over the past three months also emphasizes the bullish sentiment.
Technical examination points to a notable upswing when considering the 50-day and 200-day moving averages. The 50-day moving average is $15.01, while the 200-day moving average is $9.61, revealing that the stock has performed well over the recent past.
Fundamental Analysis:
Despite exciting technical factors, the fundamentals cast a different light on Palantir. The company currently holds a market capitalization of $37.73 billion, owing to its 2.12 billion outstanding shares. However, it presents a negative EPS of -0.12, leading to a negative PE ratio of -148.42, making it unattractive from a fundamental profit-earning point of view.
The average trading volume indicates strong market interest, with Palantir averaging around 81.35 million in trade volume, whereas the volume on July 28 was notably higher at 103.56 million shares traded.
Palantir's discounted cash flow (DCF) of $19.07 suggests the company holds some intrinsic value higher than the current market price. However, the analysts' consensus target of $10.75, median target of $8, and target range of $4.5 - $25 implies significant uncertainty about Palantir’s potential value, making the stock a potential risky investment.
Recent News:
Recent news regarding Palantir underscores the company's promising positioning in the AI market. Analysts have compared Palantir to the 'Messi of AI,' expressing optimism about its future prospects. News reports have suggested potential revenue growth due to expanded AI uses in commercial and government sectors, with respected analyst Dan Ives predicting a price target of $25 and an "outperform" rating.
Upcoming Predictions:
Based on the technical analysis, Palantir is poised for more gains. However, the next trading day on July 31, 2023, may experience some fluctuations. The share price might see a slight correction due to the recent sharp rise. Nevertheless, the trend should generally remain positive over the upcoming week, especially with the upcoming earnings announcement on August 7, 2023.
Conclusion and Recommendation:
After a detailed analysis, considering both its technical strength versus fundamental weaknesses and the optimistic news sentiment, Palantir Technologies is categorized as a 'Hold'. It is recommended that investors keep a close watch on further developments, especially related to the company's AI strategies and its earnings announcement in August. It is important, however, to approach this stock with caution given its negative EPS, considerable PE ratio, and differing target prices among analysts.
