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The fundamental business is growing good and may continue to do so but what is bewildering is the growth in the share price which is completely detached from the fundamentals.
Even taking lofty valuation priced for perfection, the stock appears overvalued. Consider the following for 5 year projection:
- 60% CAGR revenue growth (currently 20%)
- 30% profit margin (currently 16%)
- 30x Forward PE (currently 500+)
Even this lofty assumption gives a valuation of ~70. Can company deliver on these lofty parameters for next 5 years?
To reverse engineer for 10 year. To justify current price of $103,
- 40% CAGR revenue growth for 10 years. 10 Year End revenue 83B
- 30% profit margin for next 10 years.
- Future PE of 30x.
Is it possible consistently for 10 years?
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Disclaimer
The user VIMMS has a position in NasdaqGS:PLTR. Simply Wall St has no position in any of the companies mentioned. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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NahuaCapital
Community Contributor
A $1T Company In The Making
Many don't understand the importance of Palantir, specially witch such young and unstoppable sector such as the revolutionary AI craze that has branched out and all continue to do so, specially when it comes to weapons and what such a great company that has no competition such as Palantir that offers many of its clients defense Palantir's customers include: Government agencies The US Department of Defense, US Air Force, US Department of Homeland Security, and the National Geospatial-Intelligence Agency Large businesses Amazon Services, AT&T, United Airlines, CVS Health, BP, Stellantis USA, Rio Tinto, and General Mills Other companies Morgan Stanley, Merck KGaA, Airbus, Wejo, Lilium, PG&E, Fiat Chrysler Automobiles, Origin Energy, and Aramark Palantir's software is used for data integration and analysis, and for continuous integration/continuous delivery (CI/CD). The company's relationship with the CIA began when it sold its software to help detect roadside bombs in the wars in Iraq and Afghanistan.
View narrativeUS$440.00
FV
74.4% undervalued intrinsic discount31.99%
Revenue growth p.a.
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about 1 month ago author updated this narrative
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ab1549
Community Contributor
Palantir Technologies will see a 25% revenue surge in 3 years
Given the valuation data provided, and drawing from broader market sentiment and historical trends, here's an analysis of Palantir Technologies Inc. including potential market risks: Valuation Analysis 1.
View narrativeUS$96.00
FV
17.3% overvalued intrinsic discount26.00%
Revenue growth p.a.
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about 1 month ago author updated this narrative
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HedgeY
Community Contributor
A Key Al-Data Winner but Valuation is a High Hurdle, Launch with a Neutral Rating
UBS; GLOBAL RESEARCH; 18 DEC 2024 Summary We're launching coverage of Palantir shares with a Neutral rating, an $80 price target, 2025/2026 estimates that are well above the Street consensus (+200bps on revs growth) and a very positive view of the fundamentals. We root our views in conversations with 17 large Palantir customers and other checks and offer their unvarnished feedback in this report, which focuses more than we normally would on the core "what exactly does Palantir do?" question, in addition to unpacking the uplift from its Al-Data exposure.
View narrativeUS$80.00
FV
40.8% overvalued intrinsic discount11.82%
Revenue growth p.a.
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about 1 month ago author updated this narrative
WA
Consensus Narrative from 20 Analysts
AI Ambitions Fuel Growth But Overshooting Margins, Valuation Warnings Loom
Key Takeaways Expectation of rapid revenue growth from AI deployment might o The analysts have a consensus price target of $37.2 for Palantir Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $57.0, and the most bearish reporting a price target of just $11.0. In order for you to agree with the analyst's consensus, you'd need to believe that by 2027, revenues will be $5.0 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 94.5x, assuming you use a discount rate of 6.9%.
View narrativeUS$37.20
FV
202.8% overvalued intrinsic discount23.21%
Revenue growth p.a.
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3 months ago author updated this narrative