UPDATE: Deutsche Bank Starts Palantir Technologies Inc. (PLTR) at Hold
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Deutsche Bank analyst Brad Zelnick initiates coverage on Palantir Technologies Inc. (NYSE: PLTR) with a Hold rating and a price target of $25.00.
The analyst comments "While we appreciate Palantir’s strong technology platforms, mission-critical applications, and the robust market demand for AI / Analytics, we are concerned on several fronts including the sustainability of pricing, ability to penetrate down-market, and ultimately the long-term economics of the business. Palantir is perhaps best defined by its use cases: whether that be hunting terrorists, saving soldiers’ lives by predicting the locations of roadside explosives, or any of the many ultra-high-stakes applications in both public and private sectors – all mission-critical. Palantir deviates from patterns most familiar to software investors given its outsized public sector exposure, high customer concentration, cancellable contracts, tightly coupled software and services, and ultimately a unique revenue model. This doesn’t make it a bad business, but the lack of transparency to mix and degree by which stock comp flatters profitability, both limit our confidence in the long-term economics of the business. We therefore think holistically about valuation, whereby PLTR trades at 30x EV/Revenue (2022E) vs. 18x for its peer group that includes a mix of high-growth software companies and government contractors, thus supporting our Hold rating and DCF-derived $25 target price."
Shares of Palantir Technologies Inc. closed at $25.88 yesterday.
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