Palantir Stock Slides As Wall Street Digests Quarterly Results

Shares of Palantir (PLTR) are under pressure on Wednesday after the maker of software and analytics tools for the defense industry and large corporations reported in-line earnings per share but better than expected revenue for the first quarter. While Goldman Sachs analyst Christopher Merwin was "encouraged" by the "noteworthy" quarter, his peer at Citi kept a Sell rating on the shares following what he called a "mixed" first quarter with a smaller than typical revenue beat.

RESULTS: On Tuesday, Palantir reported first-quarter adjusted earnings per share of 4c, in-line with the expected 4c, and revenue for the quarter of $341.23M, which topped the consensus forecast of $332.23M. The company reported first-quarter adjusted EBITDA of $119.82M, and adjusted free cash flow of $151M, up $441M year-over-year, and representing a 44% margin. Palantir also said U.S. commercial revenue grew 72% year-over-year and U.S. government revenue grew 83% year-over-year.

For the second quarter, the company sees revenue of $360M, with consensus at $344.31M, and adjusted operating margin of 23%. Additionally, Palantir said it sees a full-year 2021 adjusted free cash flow of over $150M and annual revenue growth of 30% or greater for 2021 through 2025.

'NOTEWORTHY' Q1: Following Palantir's quarterly results, Goldman Sachs analyst Christopher Merwin lowered his price target on the stock to $30 from $34, while keeping a Buy rating on the name. The analyst argued that the company reported a "noteworthy" first quarter as revenue growth accelerated to 49% from 40% in the fourth quarter, and cash adjusted free flow margins increased by 171 points year-over-year to 44%. The "strong" sales were mostly a result of the U.S. business as lingering pandemic headwinds weighed on international, the analyst added. Merwin is "encouraged" to see that the commercial business added 11 new customers in the quarter but his target drops due to comp group multiple compression.

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