HSBC analyst Stephen Bersey has upgraded Palantir Technologies Inc. to a buy from hold, citing the company’s impressive quarterly results and strong growth. Bersey predicts that Palantir will continue to gain momentum, with revenue potentially increasing by 20% to 22% over the next few years. This growth could be fueled by the rise in defense, counterterrorism, and intelligence spending, driven by the geopolitical unrest of our time.
Bersey also expects adjusted earnings per share to jump by 25% next year, thanks to Palantir’s operating leverage. The company’s focus on artificial intelligence (AI) has also been a major driver of success. Palantir’s Artificial Intelligence Platform, or AIP, has been a significant contributor to its revenue growth, aided by the implementation of new bootcamps to accelerate new-contract acquisitions.
The shift in strategy is expected to result in faster revenue growth for Palantir while simultaneously reducing sales and marketing costs as a percentage of revenue. Bersey views the company’s valuation as justified, despite its multiple of 60.1 times estimated 2024 earnings being twice that of the broader software sector.
In midday trading Friday, Palantir shares were up by 5% to just under $19. Bersey has increased his price target to $21 from $16 in his latest report. The stock has seen an impressive surge of nearly 200% this year, outpacing the 14% increase in the S&P 500 index.
Palantir Technologies Inc. is positioning itself as an industry leader in the software world, delivering accelerated growth and impressive financial results. With its AI-focused approach and strong market performance, Palantir is definitely a company to watch out for in the coming years.