Shares of Palantir Technologies plunged 8.6% in Tuesday’s morning trading after the technology company posted a fourth-quarter loss per share of $0.08, while analysts had expected earnings of $0.02 per share.
Palantir (PLTR) reported a loss of $156.6 million during the quarter. Meanwhile, Q4 revenue jumped 40% year-on-year to $322 million, beating the Street consensus of $300.7 million.
The company signed 21 contracts in the fourth quarter with each contract worth $5 million or more. In FY20, average revenue per customer rose 41% to $7.9 million year-on-year.
In the first quarter of FY21, Palantir expects year-on-year revenue growth of 45% and an adjusted operating margin of 23%. For FY21, the company anticipates sales to grow more than 30% year-on-year. (See Palantir stock analysis on TipRanks)
Earlier this month, Morgan Stanley analyst Keith Weiss reiterated a Sell rating and a price target of $17 on the stock.
Weiss said, “PLTR shares up +55% YTD [year-to-date], compared to the broader software group average of +5% (and recent IPOs +10%), largely reflects significant retail optimism on the business driven by new government contract announcements, in our view.”
“Despite the outperformance and handful of new contracts, the fundamental story at Palantir and outstanding key debates outlined in our December downgrade note remain largely unresolved and, if anything, are more pronounced given a valuation that now sits at 45x CY22e sales on a fully diluted basis (vs. ~33x at the time of our downgrade),” the analyst added.
The rest of the Street is cautiously bearish about the stock with a Moderate Sell consensus rating. That’s based on 1 analyst recommending a Buy, 1 analyst suggesting a Hold, and 3 analysts say Sell. The average analyst price target of $22.25 implies 23.1% downside potential to current levels.
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