Palantir Technologies Inc. (PLTR) PT Cut to $30 at Goldman Sachs After Earnings

Goldman Sachs analyst Christopher Merwin lowered the price target on Palantir Technologies Inc. (NYSE: PLTR) to $30.00 (from $34.00) after 1Q revenue growth accelerated to 49% from 40% in Q4 and cash adj free flow margins increased by 171 pts y/y to 44%. The strong quarter on the top line was mostly a result of the US business (+83% y/y for gov’t and +72% y/y for commercial) while lingering pandemic headwinds weighed on international.

The analyst reiterated a Buy rating, stating "We were encouraged to see that the commercial business added 11 new customers in the quarter, as Palantir’s efforts to broaden distribution for its Foundry platform are already paying off. As the company adds more GSI partners and continues to modularize Foundry, we expect to see a sustainably higher pace of customer additions going forward. Also, even as Palantir invests aggressively in sales capacity (50 new reps in Q1) and R&D, cash flow margins are scaling rapidly due in part to the lapping of headwinds last year from the shift in customer billings terms from multi-year to annual, as well as steadily improving gross margins from shorter implementation times. On account of the 1Q beat, our FY21/22/23 estimates increase by 2%/2%/2%. Our PT goes to $30 from $34 due to comp group multiple compression".

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