Sign InPalantir's Stock Faces Corrections Amid Overbought Position and Positive News Sentiment
Summary
Palantir Technologies Inc., a public American software company specializing in big data analytics, experienced a 2.76% increase in its stock price on October 17, 2023, but technical indicators suggest that it may be overbought and due for a correction, while fundamental analysis reveals that the stock is undervalued, leading to a recommendation of Hold for potential investors. (Analysis conducted on October 17, 2023)
Company Overview
The subject of this analysis is Palantir Technologies Inc. (PLTR), a public American software company that specializes in big data analytics. The company went public three years ago and has experienced significant changes in its stock performance since then.
Technical Analysis
On October 17, 2023, Palantir closed trading at $17.84, marking a 2.76% increase from the previous trading day, with a trading volume of 54.11 million, which is lower than its average volume of 63.01 million shares. Palantir's stock price has been largely bullish, with the Relative Strength Index (RSI) at 74, indicating that it may be overbought.
The 50-day Moving Average of $15.56 and the 200-day Moving Average of $11.96 suggest that the stock has been on a positive trend, with the Moving Average Convergence Divergence (MACD) of 0.46 also indicating bullish momentum. The stock has managed to sustain above its stop-loss level of $17.18, signaling strong buying pressure.
Palantir's current support and resistance levels stand at $17.04 and $17.99 respectively. The high Average True Range (ATR) of 4.86 could suggest a potential for high volatility.
Fundamental Analysis
As of the provided data, Palantir has a market capitalization of $38.39 billion. It has outstanding shares totalling 2.15 billion. It currently has a negative earnings per share (EPS) at $-0.02. Considering the current earnings, Palantir's PE ratio stands at -892, indicating the company is not generating positive earnings.
Discounted Cash Flow (DCF) analysis reveals a fair value of $19.10 per share, which is above the current trading price, indicating the stock is undervalued.
Taking the opinion of the market, the consensus recommendation for Palantir is "Buy", with seven buys and only one hold and three sell ratings. Interestingly, the median target price is set at $9.50, seemingly at odds with the current price and the DCF value.
News Sentiment Analysis
Recent news indicates optimism towards the company's potential growth in coming years, with a strong focus on its AI capabilities. In the short term, the company stands to gain from averted government shutdown, providing stability to its operations. However, the report of controversial U.K. contract with Palantir raises some concerns about the company's business practices.
Stock Performance Predictions
As for the predictions, considering the technical indicators and fundamental numbers, Palantir's stock price could experience some corrections on October 18, 2023, due to its overbought position. Over the coming week, volatility may increase, influenced by broader market movements and news sentiments.
Final Evaluation
In terms of an investment decision, considering the strong technical position, positive news sentiment, and the undervalued DCF valuation, Palantir can be classified as a 'Hold'. The impending earnings announcement on November 2, 2023, may also bring new information that could influence the stock's direction. Despite the optimism, potential investors should also consider the negative EPS, the high PE ratio and recent controversies attached to the company before making an investment decision.
