Upgrading Palantir from Strong Sell to Hold following impressive Q4 2024 results and commercial growth

Introduction

In recent years, Palantir has been a polarizing stock among investors, with some analysts giving it a strong sell rating due to its high valuation metrics, while others have been bullish on its potential for growth. However, following the release of its Q4 2024 results and the announcement of significant commercial growth, we have decided to upgrade Palantir to a hold rating.

Commercial Growth

One of the key drivers behind our decision to upgrade Palantir is its impressive commercial growth. The company’s U.S. commercial customer base has grown nearly 5x in the past three years, a remarkable feat that demonstrates the strength of its product offerings and the growing demand for its solutions in the market.

Government Revenue

In addition to its commercial success, Palantir has also maintained strong government revenue, further solidifying its position as a leader in the data analytics space. This diversification of revenue streams is a positive sign for the company’s long-term sustainability and growth potential.

Potential for Multiple Compression

While Palantir’s valuation metrics may still be considered high by some investors, we believe that there is potential for multiple compression through earnings growth rather than price correction. As the company continues to expand its customer base and enhance its product offerings, we expect to see an increase in profitability that could justify its current valuation.

How this will affect me?

As a current investor in Palantir, the upgrade from a strong sell to a hold rating may provide some reassurance that the company’s growth prospects are strong. While the stock may not be a strong buy at this time, holding onto your position could prove to be a wise decision as the company continues to execute on its growth strategy.

How this will affect the world?

Palantir’s success and continued growth have the potential to impact the world in a number of ways. By providing powerful data analytics solutions to both commercial and government customers, the company is helping to drive innovation and efficiency in a wide range of industries. This could lead to improved decision-making, increased productivity, and ultimately, positive economic growth on a global scale.

Conclusion

In conclusion, the decision to upgrade Palantir from a strong sell to a hold rating is based on the company’s impressive Q4 2024 results and commercial growth. While its valuation metrics may still be a concern for some investors, we believe that the potential for earnings growth and multiple compression outweighs the risks at this time. As always, it is important for investors to conduct their own research and carefully consider their investment decisions in light of these developments.