Palantir
Technologies PLTR is
set
to
release
its
first-quarter
earnings
report
on
May
6.
Here’s
Morningstar’s
take
on
what
to
look
for
in
Palantir’s
earnings
and
stock.
Billings: To
get
a
better
sense
of
Palantir’s
success
with
artificial
intelligence
and
whether
its
boot
camps
(hands-on
training
sessions
for
customers
to
implement
the
Artificial
Intelligence
Platform
into
their
business)
are
leading
to
customer
conversions,
investors
will
be
keenly
seeking
forward-looking
indicators
of
demand
for
the
firm’s
solutions.
Customer
additions
(particularly
in
commercial): Just
like
last
quarter,
we
will
keep
a
keen
eye
on
whether
new
customers
are
onboarding
Palantir’s
platforms,
and
to
what
degree
the
Artificial
Intelligence
Platform
is
helping
it
land
users.
Again,
we
will
be
curious
about
whether
the
firm’s
tremendous
number
of
boot
camps
will
translate
into
actual
customers.
Government
sales: In
the
wake
of
the
firm
scoring
the
TITAN
contract
with
the
US
government,
management’s
commentary
on
this
vertical
will
be
of
interest.
We
would
expect
an
uptick
not
only
due
to
the
contract
but
also
a
general
uplift
in
governmental
spending
on
AI,
big
data,
etc.
Key
Morningstar
Metrics
for
Palantir
•
Fair
Value
Estimate:
$16.00
•
Morningstar
Rating: ★★
•
Morningstar
Economic
Moat
Rating:
Narrow
•
Morningstar
Uncertainty
Rating:
Very
High
PLTR
Bulls
Say
•
Palantir
has
strong
secular
tailwinds,
as
the
AI/ML
market
is
expected
to
grow
rapidly
due
to
the
exponential
increase
in
data
harvested
by
organizations.
•
With
products
targeting
both
commercial
and
governmental
clients,
Palantir
has
a
distributed
top
line,
with
noncyclical
governmental
revenue
insulating
the
overall
top
line
during
lean
times.
•
Palantir’s
focus
on
modular
sales
could
lead
to
substantially
more
commercial
clients,
which
it
could
subsequently
upsell.
PLTR
Bears
Say
•
By
not
selling
to
countries
or
companies
that
are
antithetical
to
its
mission
and
cultural
values,
Palantir
has
self-restricted
its
growth
opportunities.
•
Palantir’s
AI
platform
is
off
to
a
good
start,
but
we
anticipate
robust
competition
in
the
years
ahead.
•
Palantir’s
executive
team
has
made
questionable
strategic
decisions
in
the
past.
While
past
performance
isn’t
necessarily
indicative
of
future
results,
the
missteps
could
merit
caution.
Fair
Value
Estimate
for
Palantir
Stock
With
its
2-star
rating,
we
believe
Palantir’s
stock
is
overvalued
compared
with
our
long-term
fair
value
estimate
of
$16
per
share,
which
implies
a
2024
enterprise
value/sales
multiple
of
12
times.
We
forecast
Palantir’s
revenue
to
grow
at
a
21%
compound
annual
growth
rate
over
the
next
five
years
as
the
firm
expands
both
governmental
and
commercial
operations.
We
expect
the
majority
of
this
top-line
growth
to
be
driven
by
commercial
clients
as
the
firm
seeks
to
broaden
its
commercial
client
base.
While
government
clients
can
be
sticky,
large
governmental
contracts
create
lumpiness
in
revenue.
As
a
result,
Palantir’s
shift
to
more
commercial
clients
should
create
a
more
ratable
revenue
mix.
We
also
expect
the
firm
to
continue
expanding
sales
within
its
existing
client
base.
We
view
Palantir’s
strong
net
retention
rate
as
an
indicator
of
this.
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