2024-02-16 10:47:13 ET
Summary
- At first glance, Palantir's valuation looks inflated compared to its fundamentals.
- However, Palantir's profitability should grow to justify its high valuation within 5 years even if its top line grows at a modest rate.
- In addition, Palantir's stock price could climb to $48-$72 if the company's growth re-accelerates, which is quite realistic.
- The overall risk-reward outlook is compelling, and I rate Palantir stock a strong buy.
At first glance, the valuation assigned to Palantir Technologies Inc. (NASDAQ: PLTR ) looks very inflated. Palantir has a market capitalization of $52 billion with 2023 revenue of only $2.2 billion and top-line growth of only 17%. Operating income was $209 million (non-GAAP). Thus, PLTR stock trades at 24x sales (ttm) and 62x operating income (run-rate) with tepid revenue growth. How can this valuation make sense?...
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Palantir Doesn't Need Heroics To Justify Its High Valuation