William Blair Sees Palantir Technologies Inc. (PLTR) Post Market Jump as Overreaction Considering the White House Cut its Budget

William Blair analyst Kamil Mielczarek reiterated an Underperform rating on Palantir Technologies Inc. (NYSE: PLTR) after the company announced that it has been selected to progress to the next phase of the U.S. Army’s Distributed Common Ground System (DCGS-A) Capability Drop-2 (CD-2) program. The announcement comes ahead of the Army’s annual AUSA conference next week.

The analyst believes that while this is a positive development for Palantir that could result in a significant contract in the future, the 10%-plus after-hours stock move (a $5 billion increase in market value) is an overreaction when considering the details. He stated "The White House budget only requested $92.6 million for the Distributed Common Ground System
(DCGS-Army) program for government fiscal year 2022 (exhibit 1). This is down from $198 million in government fiscal year 2021. Of the $92.6 million, only approximately $22 million is designated for capability drop software. The total funding is spread across numerous defense contractors, including General Dynamics (NYSE: GD) and CACI International (NYSE: CACI). It is possible that the funding for the DCGS program as well as the software portion of the program increases as the budget is negotiated. It is also possible that multiple years of budget dollars go into a future contract."

For an analyst ratings summary and ratings history on Palantir Technologies Inc. click here. For more ratings news on Palantir Technologies Inc. click here.

Shares of Palantir Technologies Inc. closed at $23.21 yesterday.

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