Analyst Note| Mark Cash |
We are raising our fair value estimate for narrow-moat Palantir Technologies to $25 from $24 after its first-quarter results left us more bullish about its long-term prospects. While we do not expect GAAP profitability for years, we believe Palantir is prudently investing in ramping up its business to land a wider breadth of organizations from various industries, sizes, and geographic locations. Palantir constitutes a minuscule amount of overall U.S. defense spending and has an embryonic commercial customer base; however, once Palantir’s solutions are installed, we believe organizations can become reliant on its products. With shares trading around $19 in intraday trading, we believe investors have upside to capture in this disruptor.