Palantir Is A Buy: Let Me Tell You Why

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Palantir Is A Buy: Let Me Tell You Why

seekingalpha2022-06-03

Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...

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AnaiAnai
·2022-06-05
loss making company. nothing special.
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1
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Jesscy
·2022-06-05
PLTR worth to invest
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AuntieAaA
·2022-06-04
GOOD COMING
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AlanGoh
·2022-06-04
I hold pltr. Thanks for affirming. Hope I'm right :)
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traveleat123
·2022-06-04
Go go go
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tungngie
·2022-06-04
Have to be patient. Hehe.
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2
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SCLIEW
·2022-06-04
666
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TF105
·2022-06-04
Nice
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ckmtan
·2022-06-04
Good stock with potential upside❤️
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BKT
·2022-06-03
Good. Pls like thanks.
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sunshine138
·2022-06-03
Ok
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tigernaut
·2022-06-03
👍
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Tradehub
·2022-06-03
$Palantir Technologies Inc.(PLTR)$Nope. I will Buy only when it hits $7-5 range. I waited for 2 years and bought my first lots at about $7 a few months ago. I will wait for it to go down again in the coming months before I buy the 2nd lots.
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Bspn
·2022-06-03
Ok
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SimaWuqin
·2022-06-03
The drop is inevitable .. Will just buy more at 7!
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5
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Benjean
·2022-06-03
Great info
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Money Fish
·2022-06-03
Good News Bad news... both makes the price drop... 😓
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UTOtrader
·2022-06-03
Sell but cannot tell u y. Hahaha
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Sky Tgr
·2022-06-03
PLTR now : Put Little, Try Right now
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frusty
·2022-06-03
Ok
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Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[{"id":9059212423,"gmtCreate":1654386995862,"gmtModify":1676535438104,"author":{"id":"3583884958321017","authorId":"3583884958321017","name":"AnaiAnai","avatar":"https://static.tigerbbs.com/8b0d0d8e20a4082ac0bc6a98756546ec","vip":1,"crmLevel":1,"crmLevelSwitch":1},"htmlText":"loss making company. nothing special.","listText":"loss making company. nothing special.","text":"loss making company. nothing special.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059212423","repostId":2240194962,"repostType":2,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059625320,"gmtCreate":1654359256960,"gmtModify":1676535436113,"author":{"id":"4094645548234760","authorId":"4094645548234760","name":"Jesscy","avatar":"https://community-static.tradeup.com/news/9e7f833a235aa6dec073e4b8e10b1443","vip":1,"crmLevel":3,"crmLevelSwitch":0},"htmlText":"PLTR worth to invest","listText":"PLTR worth to invest","text":"PLTR worth to invest","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059625320","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059877873,"gmtCreate":1654345461592,"gmtModify":1676535434235,"author":{"id":"3583049143664216","authorId":"3583049143664216","name":"AuntieAaA","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"GOOD COMING","listText":"GOOD COMING","text":"GOOD COMING","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059877873","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059812278,"gmtCreate":1654326933394,"gmtModify":1676535432600,"author":{"id":"3570187411453325","authorId":"3570187411453325","name":"AlanGoh","avatar":"https://static.tigerbbs.com/de7c3c15ca8d800dc8cfed7fb85ee1b3","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":5,"crmLevelSwitch":1},"htmlText":"I hold pltr. Thanks for affirming. Hope I'm right :)","listText":"I hold pltr. Thanks for affirming. Hope I'm right :)","text":"I hold pltr. Thanks for affirming. Hope I'm right :)","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059812278","repostId":2240194962,"repostType":2,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059121346,"gmtCreate":1654313541385,"gmtModify":1676535430546,"author":{"id":"4098682592538030","authorId":"4098682592538030","name":"traveleat123","avatar":"https://community-static.tradeup.com/news/97a95205f615c20a20177e08a1f0cd4e","vip":1,"crmLevel":3,"crmLevelSwitch":0},"htmlText":"Go go go","listText":"Go go go","text":"Go go go","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059121346","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059129963,"gmtCreate":1654313374553,"gmtModify":1676535430494,"author":{"id":"3576456086582950","authorId":"3576456086582950","name":"tungngie","avatar":"https://static.tigerbbs.com/988bf89c2727c98e8bd27200a813c1b2","vip":1,"crmLevel":4,"crmLevelSwitch":1},"htmlText":"Have to be patient. Hehe.","listText":"Have to be patient. Hehe.","text":"Have to be patient. Hehe.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059129963","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059136963,"gmtCreate":1654309611252,"gmtModify":1676535429477,"author":{"id":"4092970777728640","authorId":"4092970777728640","name":"SCLIEW","avatar":"https://static.tigerbbs.com/5da553e4d3d35db75d1caae023ca8a03","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"666","listText":"666","text":"666","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059136963","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059193557,"gmtCreate":1654308318379,"gmtModify":1676535429178,"author":{"id":"4103845292937490","authorId":"4103845292937490","name":"TF105","avatar":"https://community-static.tradeup.com/news/970ff314f46a910a166b2a93d12f115a","vip":1,"hat":"https://static.tigerbbs.com/a3dee1aa3a3a3c1814833a4d3f8a5669","crmLevel":2,"crmLevelSwitch":0},"htmlText":"Nice","listText":"Nice","text":"Nice","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059193557","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059959378,"gmtCreate":1654297498994,"gmtModify":1676535425511,"author":{"id":"4107590982975840","authorId":"4107590982975840","name":"ckmtan","avatar":"https://community-static.tradeup.com/news/4b0c0b1aeb9fb3f7e9528c962f00637e","vip":1,"hat":"https://static.tigerbbs.com/a3dee1aa3a3a3c1814833a4d3f8a5669","crmLevel":2,"crmLevelSwitch":1},"htmlText":"Good stock with potential upside❤️","listText":"Good stock with potential upside❤️","text":"Good stock with potential upside❤️","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059959378","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059074164,"gmtCreate":1654270899458,"gmtModify":1676535423428,"author":{"id":"3570853427202414","authorId":"3570853427202414","name":"BKT","avatar":"https://community-static.tradeup.com/news/15cb8e8f0a7c44ca01c83b3bfdddbd86","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Good. Pls like thanks.","listText":"Good. Pls like thanks.","text":"Good. Pls like thanks.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059074164","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059044290,"gmtCreate":1654269830911,"gmtModify":1676535423209,"author":{"id":"3586655655659820","authorId":"3586655655659820","name":"sunshine138","avatar":"https://static.tigerbbs.com/23149c63a63bfeec1572cc27e1322750","vip":1,"crmLevel":4,"crmLevelSwitch":0},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059044290","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059024681,"gmtCreate":1654267111344,"gmtModify":1676535422595,"author":{"id":"3567239827558758","authorId":"3567239827558758","name":"tigernaut","avatar":"https://static.tigerbbs.com/66e331c670eb88443b88c6bdb76224cf","vip":1,"hat":"https://static.tigerbbs.com/b0a2963eb37c60c5d6d4a8dbcd266952","crmLevel":4,"crmLevelSwitch":1},"htmlText":"👍","listText":"👍","text":"👍","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059024681","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059069895,"gmtCreate":1654264810217,"gmtModify":1676535421994,"author":{"id":"3579899622172789","authorId":"3579899622172789","name":"Tradehub","avatar":"https://static.tigerbbs.com/3f9e3264ca5e5b85380896a391061b13","vip":1,"crmLevel":3,"crmLevelSwitch":1},"htmlText":"<a href=\"https://ttm.financial/S/PLTR\">$Palantir Technologies Inc.(PLTR)$</a>Nope. I will Buy&nbsp;only when it hits $7-5 range. I waited for 2 years and&nbsp;bought my first lots&nbsp;at about $7 a few months ago.&nbsp;I will wait for it to&nbsp;go down again in the coming months before I buy the 2nd&nbsp;lots.&nbsp;","listText":"<a href=\"https://ttm.financial/S/PLTR\">$Palantir Technologies Inc.(PLTR)$</a>Nope. I will Buy&nbsp;only when it hits $7-5 range. I waited for 2 years and&nbsp;bought my first lots&nbsp;at about $7 a few months ago.&nbsp;I will wait for it to&nbsp;go down again in the coming months before I buy the 2nd&nbsp;lots.&nbsp;","text":"$Palantir Technologies Inc.(PLTR)$Nope. I will Buy only when it hits $7-5 range. I waited for 2 years and bought my first lots at about $7 a few months ago. I will wait for it to go down again in the coming months before I buy the 2nd lots.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059069895","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059082329,"gmtCreate":1654264320161,"gmtModify":1676535421875,"author":{"id":"3582502134655895","authorId":"3582502134655895","name":"Bspn","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059082329","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059086769,"gmtCreate":1654264296651,"gmtModify":1676535421868,"author":{"id":"3568459082756365","authorId":"3568459082756365","name":"SimaWuqin","avatar":"https://static.tigerbbs.com/6bc36ec0fc750ba6d2fd4bb2d77c4c09","vip":1,"hat":"https://static.tigerbbs.com/0a8758340a08196056f8bc1e54805193","crmLevel":6,"crmLevelSwitch":1},"htmlText":"The drop is inevitable .. Will just buy more at 7!","listText":"The drop is inevitable .. Will just buy more at 7!","text":"The drop is inevitable .. Will just buy more at 7!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059086769","repostId":2240194962,"repostType":2,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059016083,"gmtCreate":1654263165742,"gmtModify":1676535421628,"author":{"id":"3579343697014515","authorId":"3579343697014515","name":"Benjean","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":5,"crmLevelSwitch":1},"htmlText":"Great info","listText":"Great info","text":"Great info","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059016083","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059038152,"gmtCreate":1654260845276,"gmtModify":1676535421322,"author":{"id":"4102681278669620","authorId":"4102681278669620","name":"Money Fish","avatar":"https://community-static.tradeup.com/news/eadc39396f6081499b7c704f3f0a846b","vip":1,"hat":"https://static.tigerbbs.com/0a8758340a08196056f8bc1e54805193","crmLevel":4,"crmLevelSwitch":1},"htmlText":"Good News Bad news... both&nbsp;makes the price drop... 😓&nbsp;","listText":"Good News Bad news... both&nbsp;makes the price drop... 😓&nbsp;","text":"Good News Bad news... both makes the price drop... 😓","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059038152","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059093078,"gmtCreate":1654258509895,"gmtModify":1676535421029,"author":{"id":"3574547619690492","authorId":"3574547619690492","name":"UTOtrader","avatar":"https://static.tigerbbs.com/82be6befb29ac8516e463638d3f659d5","vip":1,"crmLevel":4,"crmLevelSwitch":0},"htmlText":"Sell but cannot tell u y. Hahaha","listText":"Sell but cannot tell u y. Hahaha","text":"Sell but cannot tell u y. Hahaha","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059093078","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059004139,"gmtCreate":1654257938821,"gmtModify":1676535420949,"author":{"id":"4105164288302490","authorId":"4105164288302490","name":"Sky Tgr","avatar":"https://static.itradeup.com/news/2df38375a020643507d69e511e3afc6b","vip":1,"crmLevel":2,"crmLevelSwitch":1},"htmlText":"PLTR now : Put Little, Try Right now&nbsp;","listText":"PLTR now : Put Little, Try Right now&nbsp;","text":"PLTR now : Put Little, Try Right now","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059004139","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9059005310,"gmtCreate":1654257661130,"gmtModify":1676535420925,"author":{"id":"3555119187338975","authorId":"3555119187338975","name":"frusty","avatar":"https://static.tigerbbs.com/46c85297aaa1b07647be4b2ca33ea8e8","vip":1,"crmLevel":4,"crmLevelSwitch":0},"htmlText":"Ok","listText":"Ok","text":"Ok","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059005310","repostId":2240194962,"repostType":4,"repost":{"id":"2240194962","pubTimestamp":1654249825,"share":"https://www.laohu8.com/m/news/2240194962?lang=&edition=full","pubTime":"2022-06-03 17:50","market":"us","language":"en","title":"Palantir Is A Buy: Let Me Tell You Why","url":"https://stock-news.laohu8.com/highlight/detail?id=2240194962","media":"seekingalpha","summary":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to inte","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/9cfcb4f62efa308070bcfccefe2b9353\" tg-width=\"750\" tg-height=\"422\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Black_Kira/iStock via Getty Images</p><p></p><h4><b>Reputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.</b></h4><p>The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.</p><p>R&amp;D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.</p><p>That’s why a further significant increase in revenues could be expected at low marginal development costs.</p><p>I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&amp;A scenario.</p><p>But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.</p><h2>What are the reasons behind that trend?</h2><ol><li>Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).</li></ol><p></p><p><img src=\"https://static.tigerbbs.com/72ac0d5258cae1637813bcfc4fc0aeed\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>2. The company tried to expand the commercial sector, but these results are quite recent.</p><p></p><p><img src=\"https://static.tigerbbs.com/a61d4b1e1757c9dc6536dc382ac68127\" tg-width=\"640\" tg-height=\"427\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><p>3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.</p><p>This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.</p><p>4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:</p><blockquote><i>We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts</i></blockquote><p>5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.</p><p>All that is true and proven by public information and numbers.</p><h2>Indeed, several factors need to be considered to depict the full story.</h2><h3><b>a) Market and competitive arena</b></h3><p>AI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:</p><p></p><p><img src=\"https://static.tigerbbs.com/5ba476e3a3d6192df4df50633b82fb5d\" tg-width=\"640\" tg-height=\"486\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.globenewswire.com</p><p></p><p>Some big operators set foot in the arena:</p><p></p><p><img src=\"https://static.tigerbbs.com/41c98371beb90d8750f8d87c5c7181c6\" tg-width=\"462\" tg-height=\"610\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.fortunebusinessinsights.com</p><p></p><p>But the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.</p><p></p><p><img src=\"https://static.tigerbbs.com/f310bcaab88530828be8a0666215272f\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.persistencemarketresearch.com</p><p></p><p>All that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.</p><p>In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:</p><blockquote><i>We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.</i></blockquote><p>AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.</p><h3><b>b) Know-how</b></h3><p>If you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.</p><p>Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.</p><p>Recent contracts, like the <a href=\"https://laohu8.com/S/AONE.U\">one</a> signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:</p><blockquote><i>We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic allies</i></blockquote><p>In addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.</p><p>Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&amp;D asset to reach new global customers among institutions and commercial companies.</p><h3><b>c) ERP-like</b></h3><p>Few remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.</p><p>AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&amp;D expenses at the very beginning.</p><p>Don&#39;t forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.</p><p></p><p><img src=\"https://static.tigerbbs.com/87ecafd9e588a37a43c085a8e4e47b0c\" tg-width=\"640\" tg-height=\"345\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.sap.com</p><p></p><p>Apart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”</p><p>But Palantir products don’t come without integration tools: software integration is the future for AI as well.</p><h3><b>d) Key industry players</b></h3><p>They are focusing on R&amp;D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.</p><h2><b>May Palantir be a Target?</b></h2><p>That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:</p><p></p><p><img src=\"https://static.tigerbbs.com/e2c84cfc9d9846851cb7455f52bcd8f6\" tg-width=\"640\" tg-height=\"363\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>www.palantir.com</p><p></p><ul><li>The company has proven successful in retaining the Government as a customer and expanding its business towards further sectors</li><li>It generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenues</li><li>Palantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performances</li><li>Valuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&amp;D assets to penetrate the global market and retain its people.</li><li>Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.</li></ul><h2>Conclusion</h2><p>Palantir is a buy, both as a stand-alone business and in the eventuality of a deal.</p><p>In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.</p><p>In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Palantir Is A Buy: Let Me Tell You Why</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPalantir Is A Buy: Let Me Tell You Why\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-03 17:50 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4516212-palantir-is-a-buy-let-me-tell-you-why","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240194962","content_text":"Black_Kira/iStock via Getty ImagesReputation, leverage on a large product portfolio, ability to internationalize its business and conquering new target markets are the keys to the future success of Palantir.The company has built a strong reputation in the AI market by working with the Government sector and, more recently, by expanding its business to the Commercial sector. Revenues have grown at 37% CAGR between 2018 and 2021, with improved GP% at 78% on revenues in 2021.R&D costs sustained in the past helped the company develop a wide range of products addressable to several application markets, from cybersecurity to automotive.That’s why a further significant increase in revenues could be expected at low marginal development costs.I ran a DCF projection where sales could reach $3.6B in 2025 (24% CAGR from 2021), with GP% at 78% and the company continuing generating positive cash flows and turning profitable in 2024. That is a quite prudential scenario, considering that the market is growing at 38.1% CAGR and no leader has emerged till know. Based on that, I expect a target price in the $11-$11.50 range as a stand-alone business. Further upside potential may result from an M&A scenario.But the market is still bearish on the stock, which on May 31st was down 53% on a YTD basis.What are the reasons behind that trend?Company revenues mainly come from the Government sector, accounting for 54% in Q1 2022 (61% in Q1 2021 and 58% in FY 2021 respectively).www.palantir.com2. The company tried to expand the commercial sector, but these results are quite recent.www.palantir.com3. The commercial sector target may have diverted the sales efforts previously devoted to the Government industry, whose growth pace is actually decreasing. In addition, average revenues/customer seem to show a decreasing path in Q1 2022 if you consider that 12-month trailing customers are more than tripling while revenues are increasing at a much lower pace.This may be a sign that conquering and retaining this kind of customers is still a time-consuming business. Contracts are smaller and split among a higher number of clients.4. Government contracts are complex and require a significant degree of tailored-made activities. As Palantir declares in its FY 2021 Financial Statements:We historically have not realized all of the revenue from the full deal value of our customer contracts, and we may not do so in the future. This is because the actual timing and amount of revenue under contracts included are subject to various contingencies, including exercise of contractual options, customers not terminating their contracts, and renegotiation of contracts. In addition, delays in the completion of the U.S. government’s budgeting process, the use of continuing resolutions, and a potential lapse in appropriations, or similar events in other jurisdictions, could adversely affect our ability to timely recognize revenue under certain government contracts5. Palantir is 20 years old: it generates cash, but it has always been unprofitable. The discrepancy between profit and cash is mainly due to the significant amount of stock options that the company is using to pay its employees.All that is true and proven by public information and numbers.Indeed, several factors need to be considered to depict the full story.a) Market and competitive arenaAI and Cybersecurity, where Palantir is active, are huge markets, growing at a tremendous pace:www.globenewswire.comSome big operators set foot in the arena:www.fortunebusinessinsights.comBut the role they may have in the future is still a question mark. In fact, market analysis are not aligned when it comes to AI top players (see MarketsandMarkets and fortunebusinessinsights.com for a comparison). And this is even more palpable when looking at the cybersecurity landscape.www.persistencemarketresearch.comAll that depends on several variables: the players’ specific know-how, the kind of product or service they can provide, the application target market.In none of the above statistics Palantir appears. As the company acknowledges in its FY202I Annual Report:We are fundamentally competing with the internal software development efforts of our potential customers. Organizations frequently attempt to build their own data platforms before turning to buy ours. In trying to build something on their own, they generally rely on a patchwork of custom solutions, outside consultants, IT services companies, packaged enterprise and open source software, and significant internal IT resources. In addition, our competitors include large enterprise software companies, government contractors, and system integrators. We also face competition from emerging companies as well as established companies that are only now beginning to enter this market.AI competencies are quite a new ground where know-how still needs to be exploited and strengthened. In addition, some businesses are focusing their AI competencies to specific fields (i.e. cloud security, content creation, process efficiency…) in an attempt to create niches and build strong barriers to new entrants.b) Know-howIf you consider costs sustained to provide high value solutions to the Government sectors, you may argue that Palantir is not correctly pricing its products and services to this customer segment.Indeed, the company is actually building and reinforcing its know-how and technical reputation to increase sales and acquire new customers in its original segment and in new ones as well.Recent contracts, like the one signed with the UK Ministry of Defense, are supporting this theory. The most think of the Government Sector as the US Government only. But expansion and internationalization are possible in this arena as well (at certain conditions) as the Company points out:We generally do not enter into business with customers or governments whose positions or actions we consider inconsistent with our mission to support Western liberal democracy and its strategic alliesIn addition, Palantir has provided the US Government with ad hoc solutions, from intelligence to healthcare. It’s difficult to argue that products for private clients may come at high marginal costs.Briefly, operating expenses devoted to the US Government projects may be interpreted as an R&D asset to reach new global customers among institutions and commercial companies.c) ERP-likeFew remember that SAP (SAP), a global leader in ERP products, was born in 1973 in Germany and it took more than 20 years to become the strong performing brand that everybody now knows.AI solutions are similar to what ERP software was at the beginning of 2000: designed (and highly customized) for big corporations, re-adapted and made affordable for small businesses in the following decades. All that was possible thanks to high R&D expenses at the very beginning.Don't forget the differences, anyway. ERP solutions are process-based. It’s not a case, in fact, that in its recent presentation SAP has unveiled its incubation strategy, where “Business Process Intelligence” and “Sovereign Clouds” are two key components.www.sap.comApart from the sovereign cloud component, present in Palantir portfolio as well, there is no overlap. Palantir AI is forward-looking “Foundational Software for Tomorrow – Delivered Today™.”But Palantir products don’t come without integration tools: software integration is the future for AI as well.d) Key industry playersThey are focusing on R&D to offer AI customized solutions, but that’s not enough. The market still lacks AI adequate specialists, both from a quantitative and a qualitative point of view. As a consequence, the major players are negotiating partnership and buying startups to reach their objective. As the competitive field is large, one needs to focus. It’s not a case that even newborn companies are trying to exploit their niche. My personal experience with startups in Italy seems to confirm that trend: VCs are riding the waves too, preparing the field in advance for a promising exit where industry players could be the acquirers.May Palantir be a Target?That seems quite interesting. Palantir product portfolio is wide and it targets different customer segments:www.palantir.comThe company has proven successful in retaining the Government as a customer and expanding its business towards further sectorsIt generates cash and its economics have significantly improved in the very last years, both in absolute value and as a % on revenuesPalantir people are a key to its success. They are an asset, a system inside the company. For competitors, it’s not just a matter of hiring resources, but of orchestrating performancesValuation is at discount. According to my DCF analysis, I expect an upside potential of about 27% versus May 31st closing value, with target price at $11. This does not come without risks, as it’s strongly related to the capability of Palantir to leverage on its R&D assets to penetrate the global market and retain its people.Some of the big players have plenty of cash and may be interested in acquiring technology, market share, know-how (or at least a controlling stake in it). In this case, I don’t expect the offer to be based on a 52-week historical average quote: that would imply a price around $18, that is more than double the present quotation. A believe a more probable scenario could be a premium taking into account that the company would provide a “keys in hand” solution to the Acquirer. This may result in a target price of $14-$15, a further upside potential in the range of 27-36%.ConclusionPalantir is a buy, both as a stand-alone business and in the eventuality of a deal.In the former case, it has an upside potential coming from its strengths and reputation in the AI market, with sales expansion on an international basis and leverage on deep technical skills. Target price at $11-$11.5.In addition, tech corporations may look at the company as an interesting target to internalize AI know-how and market positioning as well. Target price at $14-$15.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":172,"commentSize":0,"repostSize":0,"favoriteSize":4,"likeStatus":false,"favoriteStatus":false}}