Palantir: Titan Contract Win Underscores Continued Strength in the Government Vertical

We are raising our fair value estimate for narrow-moat Palantir to $16 from $15 as we incorporate the financial impact of the firm winning the 24-month, $178 million U.S. Army Titan, or Tactical Intelligence Targeting Access Node, contract. Along with the near-term uplift as the contract value flows through Palantir’s financials, we also see this contract award as a potential long-term value driver for the business. First, we believe Palantir’s success in landing the Titan contract could enable the firm to improve its software capabilities, leading to better bids for future large contracts. Second, while not set in stone, we see the US Army possibly extending the TITAN contract beyond its initial 24-month phase. If Palantir executes well over the next couple of years, the firm could potentially bag additional mandates as the Army builds out TITAN further.