Bank of America raises Palantir's target price to $75 as U.S. business growth accelerates and "competitive moat" expands

Zhitong
2024.11.26 06:40

Bank of America raised the target price for Palantir to $75 and reiterated a "Buy" rating due to accelerated growth in U.S. business and an expanding "competitive moat." Analysts expect the growth rate of government business to be adjusted from 24% to 29% over the next three years, and the growth rate of commercial business to be adjusted from 32% to 34%. Palantir's penetration in both government and commercial sectors is still in the early stages, leaving significant room for future growth. Analysts believe that the importance of software in industrial production is increasing, and Palantir will become a driver and winner

According to the Zhitong Finance APP, Bank of America published a research report, reiterating its "Buy" rating on Palantir (PLTR.US) and raising the target price for the software company from $55 to $75, citing accelerated growth in U.S. business and an expanding "competitive moat."

Analysts pointed out that Palantir has demonstrated its capabilities in digital enterprises and battlefields, ranging from finance to missile production. The analysts stated, "In a world where efficiency, innovation, security, and speed are the most valuable assets, we believe Palantir is a driver and winner of this new era."

The bank's analysts raised Palantir's government business growth rate for the next three years from 24% to 29%, noting that software has become a key asset in industrial production, enabling automation, data analysis, real-time monitoring, and process control. Analysts indicated that software accounts for 17% of U.S. non-residential private fixed investment, up from 11% in 2005.

Analysts believe that as companies turn to software and artificial intelligence to improve profit margins rather than expanding fixed assets, Palantir will dominate. The complexity of the company's "Ontology" concept is invaluable for the operation of generative artificial intelligence, as it encompasses challenges related to security, governance, and data robustness.

Bank of America noted that even with a surge in new commercial clients, partners, and distribution channels, the company still has significant growth potential. Analysts raised the growth rate for commercial business over the next three years from 32% to 34%.

Analysts believe that Palantir's penetration in government and commercial applications is still in its early stages. Incremental value use cases and enhanced interoperability are crucial for continued penetration and upselling opportunities.

Additionally, analysts stated that after relocating its listing to Nasdaq, Palantir is expected to meet the eligibility requirements for the Nasdaq-100 Index. The potential inclusion provides a catalyst for price increases

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