Analyst revisits Palantir stock forecast following annual report filing
Palantir is looking for adjusted earnings growth of around 34% this year.
Palantir shares slipped lower in early Wednesday trading, but remain firmly in the green for the month of February, following an updated note from a top Wall Street analyst tied to group's newly-released annual report.
Palantir (PLTR) shares have continued to outperform both their sector peers and the broader market benchmarks this year, rising more than 65% since the start of the year with gains powered in part by a stronger-than-expected fourth quarter earnings report.
The data analytics group, founded by tech investors Peter Thiel and Joe Lonsdale and run by CEO Alex Karp, forecast 2025 revenues in the region of $3.75 billion, a 30% increase from 2024 levels, while pledging to boost its non-government sales past $1.8 billion.
Palantir uses its artificial intelligence platform, known as AIP, to help clients pull together disparate collections of data into a single model that they then can build, train and deploy in their day-to-day processes.
The group also benefits from its ontology offering, a framework that helps represent and connect real-world entities, data, and processes for its commercial clients.
Palantir generated adjusted earnings of just under $1.16 billion last year, with a profit margin of around 40%, and expects a 2025 tally of around $1.56 billion.
Jefferies analyst Brent Thill, however, picked through details of Palantir's annual 10-K filing with the Securities and Exchange Commission last night and reiterated his 'underperform' rating for the stock over the next twelve months.
Palantir headcount growth in focus
The analyst carries a $60 price target on the group, which he improved from $28 per share following its fourth quarter earnings report earlier this month.
Thill noted a slowing headcount growth for the group last year, which rose by only 5% when compared to 2023 levels, and asked if management is "investing enough in the AI opportunity ahead".
"We believe this could mean one of three things," said Thill. "Palantir's AI opportunity ahead is not as big as is priced in; its engineering/technical hires are being offset by reductions elsewhere (international headcount headcount decreased by 87 from 2023 to 2024 despite overall headcount increasing by 201) or the company over-hired 2 years ago."
Related: Analysts overhaul Palantir stock price targets after earnings
Thill also noted a flat level of non-U.S. revenue growth for the group, which is unashamedly pro-American in its shareholder communications, adding that while U.S. sales were up 38% last year, international revenues have grown only 14% over the past two years.
Karp: we are 'very long on the U.S.'
"We believe we are making America more lethal, making our adversaries increasingly afraid of acting against the interests of America and especially Americans," Karp told investors on a conference call earlier this month. "And we are proud of our moral stance, and we are very long on the the U.S. and what is happening and what will happen in the future."
Positive takeaways from Palantir's 10-K, Thill said, were tied to the group's exposure to its top three clients, likely all within the U.S. Department of Defense, which accounted for 17% of overall revenues in 2024 compared to 18% in 2023.
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Thill said the "slight downtick" in exposure is a "step in the right direction in terms of reducing customer concentration risk."
"The company continues to add new logos at an increasing rate, adding 214 net new customers in 2024 (vs. 130 added in 2023) and bringing the total customer count to 711," Thill said.
Palantir shares were marked 1.2% lower in early Wednesday trading to indicate an opening bell price of $123.13 each.
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