Palantir upgraded to ‘Buy’ by UBS on strong AI and data demand

The analysts wrote that investors should see “taking vantage of this -35% determination disconnected the highest for the premier maturation communicative successful software.”

They cited the company’s projected 70% gross maturation successful 2026 and mid-50% operating margins arsenic factors making the banal “very attractive” astatine 50 times UBS’s 2027 escaped currency travel (FCF) estimates.

The analysts besides noted that Palantir continues to spot robust demand. “Our latest checks supports a presumption that Palantir is facing a precise beardown request backdrop arsenic it sits astatine the intersection of AI and information spend,” they wrote. “This concern ramp successful AI models and information is occurring close now, with Palantir a wide AI winner.”

On valuation, the UBS squad wrote that portion the banal has historically traded astatine precocious multiples, the caller pullback and upward revisions to estimates person made Palantir much accessible.

“If 1 assumes that Palantir tin turn astatine a ~50% CAGR for the adjacent 3 years, past the next-year FCF aggregate is present down to 1x the projected maturation rate,” they wrote, noting that this level could enactment a beardown valuation lawsuit for investors.

The slope acceptable a 12-month terms people of $180 connected Palantir, up astir 34% from existent levels.

This terms people is based connected a 2027 FCF aggregate of 69 times, and noted that Palantir’s presumption crossed AI, data, and modern defence exertion warrants a premium successful valuation.