Palantir stock gains ground despite naysayers

Palantir Technologies NYSE:PLTR stocks are gaining ground and could advance another 50% or more in the coming months. The company has a solid product, growing demand, deeper penetration, and widening margins that can be attributed to its utility. The company is the leading provider of data collection and mining and uses the platform to detect and prevent threats, internal and external, efficiency intelligence and product development. This company has everything but analyst support when it comes to the stock price.

For some reason, analysts continue to say no to Palantir despite a solid fourth quarter report. The company reported better-than-expected revenue, accelerated growth due to increased business activity and reversed a loss from the previous year, which should have lifted sentiment. As it stands, analysts have started to raise their price targets, but have downgraded tech stocks and kept them pegged to Reduce.

Sellers undervalue Palantir… for a reason?

At first glance, it appears that Palantir is overvalued, but Keith Fitz-Gerals has suggested that sell-side money is trying to snatch weak hands. By keeping the price target and Downtrend sentiment low, retail investors may get scared and sell the stock. In this scenario, the stock price could collapse, providing an entry that has yet to appear. Fourth quarter results suggest activity will continue to accelerate in 2024 and beat likely low estimates for 2024.

The guidance for 2024 is good but also cautious. The company expects growth of just 20% beyond the 2023 teen advancement, which is pricing in momentum and demand for AI services around the world. 30% growth in business activity and expanding end markets point to outperformance. Palantir is moving into healthcare, energy and manufacturing, with nearly limitless applications. Competitors like Snowflake and Datadog are growing at much faster rates.

Analysts sell, but institutions buy

Analysts have the stock pegged at Sell, but institutions are buying the stock. Institutions hold about 35%, which is not a large figure, but their activity increased in the third quarter of 2023 and remained strong in the first quarter of 2024 with no signs of slowing. The quarterly count for the first quarter of 2024 has already surpassed the count for the fourth quarter of 2024 and could continue to grow until the end of the quarter. The largest holder is Vanguard Group’s collective holding representing nearly 9%, primarily exchange-traded funds, but ownership is large and includes a significant amount of private capital.

HSBC downgraded Palantir to Hold following its fourth-quarter release, citing valuation as the primary factor. However, being traded at 16X earnings and expected (by HSBC) to grow at a CAGR above 20% over the next four years, its valuation doesn’t appear to be an issue for most.

Ironically, analysts are raising their price targets. Marketbeat.com tracks seven revisions following the fourth-quarter release, including five upgraded price targets and two upgrades, but the consensus still lags the market. The consensus estimate assumes a 30% decline in the stock price, which is unlikely given the technical outlook.

The technical picture: Palantir confirms itself as a critical pivot point

The PLTR stock chart is a textbook example of an IPO pop followed by implosion, bottom, and reversal. The fund is marked by a Head and Shoulders pattern and a surge in trading volume that coincides with the first quarter of 2023 results, which demonstrated that the move to open up services to businesses has been positive. Since then, trading volume has remained high and increased the price action by 175%. Now, Palantir has passed a critical pivot point at the midpoint of its trading range and is heading higher following a continuation signal.

The next target for this stock is near $29 and could be reached by the end of spring. Assuming the market can advance beyond that point, the door is open to $38.50 and a retest of the all-time high. Assuming first-quarter results are in line with 2023 trends and 2024 forecasts, the market should have no problem reaching a new high with or without analyst support. If the news is good enough, analysts change their tune and join this trade, and buying could accelerate again and move the price to new all-time highs.

Before you consider Palantir Technologies, you’ll want to hear this.

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