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Assessing Palantir Technologies (PLTR) Valuation After Strong Multi Year Shareholder Returns

Simply Wall St · 4d ago

What recent returns say about Palantir Technologies (PLTR)

With no single headline event driving Palantir Technologies (PLTR) lately, investors are instead weighing its mixed share performance. This includes a roughly 1% move over the past month and a modest decline over the past 3 months.

See our latest analysis for Palantir Technologies.

Over the past year, Palantir Technologies has paired an 8.23% year to date share price return with a very large 1 year total shareholder return of 166.28%, while the 3 year total shareholder return is around 25x the starting point, suggesting momentum has been strong despite some recent cooling in shorter term share price moves.

If Palantir has you looking at data focused software and AI names, it could be a good time to scan other high growth tech and AI opportunities through high growth tech and AI stocks for comparison.

With Palantir trading only slightly below the average analyst price target and showing very strong multi year returns, are you looking at an overhyped AI favorite, or is there still a genuine buying opportunity that markets have not fully priced in?

Most Popular Narrative: 18% Overvalued

According to BlackGoat, the latest narrative fair value of roughly US$154 sits well below Palantir’s last close around US$182, setting up a clear valuation gap for investors to weigh.

Based on a 5-year DCF valuation and very optimistic assumptions, I value Palantir today (Feb 2024) at around $89, while price is above $110. My updated assumptions:

Read the complete narrative.

Curious what kind of growth outlook and profit profile could justify that valuation call? The narrative leans on aggressive revenue expansion, rising margins and a premium earnings multiple that many investors usually reserve for elite software names.

Result: Fair Value of $153.97 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still clear risks if government contracts soften or high-growth assumptions in that DCF fail to materialise, particularly with Palantir already priced at a premium.

Find out about the key risks to this Palantir Technologies narrative.

Build Your Own Palantir Technologies Narrative

If this narrative does not fully line up with your own view, or you prefer to dig into the numbers yourself, you can build a personalised take in just a few minutes, starting with Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Palantir Technologies.

Looking for more investment ideas?

If Palantir has sharpened your interest in AI and high growth themes, do not stop here, use screeners to spot what others might be missing.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.