Assessing Palantir Technologies (PLTR) Valuation After Strong Long Term Returns And Choppy Recent Trading

Palantir Technologies: recent performance snapshot

Palantir Technologies (PLTR) has drawn attention after a period where the stock showed a 0.3% one day decline and small negative moves over the past week and month, alongside modestly positive year to date and past 3 months returns.

Against this share price backdrop, investors are also watching fundamentals. These include reported annual revenue of US$3.9b and net income of US$1.1b, together with the company’s current value score of 0.

See our latest analysis for Palantir Technologies.

Recent trading has been choppy, with a 1 day share price return of 0.31% decline and a 30 day share price return of 2.65% decline. However, the 1 year total shareholder return of 161.81% and a very large 3 year total shareholder return above 20x show that longer term momentum has been strong, even as near term enthusiasm has cooled around the current US$178.4 share price and value score of 0.

If Palantir has you thinking about where else AI driven growth might show up, this could be a useful moment to scan high growth tech and AI stocks for other ideas.

With the share price around US$178.40, a value score of 0 and an intrinsic value estimate that sits at a premium, the key question is whether Palantir is undervalued or if the market is already pricing in future growth.

Most Popular Narrative: 15.9% Overvalued

According to BlackGoat, the narrative fair value of Palantir Technologies at US$153.97 sits below the recent US$178.40 close, which puts the spotlight on the assumptions driving that gap.

Based on a 5-year DCF valuation and very optimistic assumptions, I value Palantir today (Feb 2024) at around $89, while price is above $110. My updated assumptions:

Read the complete narrative.

Curious what kind of revenue climb, margin expansion and future earnings multiple are baked into this price tag? The narrative leans on aggressive growth, rich profitability and a premium P/E usually reserved for market darlings. Want to see how those moving parts stack up to reach that fair value? Read the full breakdown behind the projections.

Result: Fair Value of $153.97 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, this narrative could still be knocked off course if growth in high expectations areas like AIP or US commercial slows, or if rich valuation multiples compress.

Find out about the key risks to this Palantir Technologies narrative.

Build Your Own Palantir Technologies Narrative

If you are not fully on board with this storyline, or would rather test the numbers yourself, you can build a custom view in minutes, starting with Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Palantir Technologies.

Looking for more investment ideas?

If Palantir is on your radar, do not stop there. Cast a wider net with a few focused stock ideas that could sharpen your watchlist.

• Spot potential mispricings quickly by checking these 875 undervalued stocks based on cash flows that line up with your view on cash flows and business quality.
• Approach the AI trend more selectively by scanning these 24 AI penny stocks that align with your conviction on data, software and automation themes.
• Strengthen an income-oriented approach by reviewing these 12 dividend stocks with yields > 3% that might fit a yield-focused strategy.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com