Analysts at Citi have reiterated their positive outlook on data analytics and defense software firm Palantir Technologies Inc. (PLTR.US) ahead of its first-quarter fiscal 2026 results, scheduled for release on May 4, Eastern Time. In a recent client note, Citi raised its performance expectations for the company, although it concurrently lowered its price target for the stock.
Citi analyst Tyler Radke stated, "We anticipate Palantir's growth momentum will persist in the first quarter, across both its U.S. government and commercial segments, with additional progress expected in international markets following major contract renewals with Airbus and Stellantis." The analyst noted, "Government contract announcements during the quarter, including a significant agreement with the U.S. Department of Agriculture, a $1 billion contract with the Department of Homeland Security, and the expansion of the Project Maven program, demonstrate Palantir's robust performance in the U.S. market."
Following discussions with management during the quarter, the analyst further confirmed that both commercial and government business remain strong. "We believe this will drive another quarter of accelerated growth, providing approximately 4 to 5 percentage points of upside for Q1 fiscal 2026 and the full year," Radke added.
The analyst also mentioned, "We have further increased our forecasts, with estimates for fiscal 2027 and 2028 now exceeding consensus expectations by more than 500 basis points. However, due to recent compression in valuation multiples across the software sector, we have lowered our price target on the stock from $260 to $210." This new target corresponds to approximately 48 times enterprise value to sales and about 87 times enterprise value to free cash flow for fiscal 2027. Radke reaffirmed a "Buy/High Risk" rating on Palantir, stating, "We believe Palantir will remain one of the primary beneficiaries of the AI wave as adoption continues to proliferate among enterprises, a view reinforced by recent AI summit developments."
It is noteworthy that Palantir's stock has declined more than 20% year-to-date, underperforming due to sector-wide sell-offs driven by concerns over AI disruption risks. Despite this, earlier this month, Wedbush maintained its "Outperform" rating on the stock with a $230 price target. The firm argued that market narratives suggesting "Anthropic is encroaching on Palantir's business" are unfounded and exaggerated. Wedbush emphasized that Palantir's competitive edge lies in its data-centric "moat," particularly the deep integration capabilities of its AIP platform in enterprise applications, which it believes is not being replaced by Anthropic's model capabilities but is instead being strengthened in the AI implementation process.
Similarly, Morgan Stanley highlighted before the earnings report that Palantir has the potential for slight growth acceleration and a possible upward revision to its full-year guidance. The bank noted that despite significant stock price underperformance, the demand environment remains healthy. Morgan Stanley assigned an "Equal-Weight" rating to Palantir with a $205 price target. Analysts indicated that Palantir enters the first quarter from a position of strength, supported by excellent fundamental momentum, positive channel checks, and potential upward earnings revisions. They concluded, "Fundamentals remain exceptionally strong, with U.S.-led growth acceleration, expanding large customer adoption, and industry-leading margins making the path to achieving a $10 billion revenue target increasingly credible."
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