Last Minute Thought: Citigroup Weighs in on Palantir Stock Ahead of Earnings - TipRanks.com

The latest readout comes at a bountiful time for Palantir investors. The stock has reaped the benefits of being associated with the AI boom, delivering returns of 220% over the past year.

In fact, its strong positioning in the space was the reason behind an upgrade from Citi analyst Tyler Radke during Q1. "We moved off Sell last Q as we became incrementally more positive in U.S. Commercial momentum (potentially driven by AIP momentum) and much improved profitability profile," said the analyst.

Looking ahead to the Q1 print, the ongoing success the company is seeing with its AIP offering remains a positive, says Radke. Last month's sold out 3rd AIPCon highlighted how the platform was gaining traction across various verticals with the company also showing a new list of customers including OpenAI.

Thus, in the commercial segment, Radke expects "some upside coming from further AIP momentum." However, Radke also thinks any "meaningful monetization path" for the platform is still some quarters away. And where the long-term is concerned, on account of stiff competition from some hyperscalers with "ramping CapEx spend" and more established data platform incumbents such as Databricks and Snowflake, Radke remains unsure about the "monetization and momentum" of AIP.

In any case, any momentum from the commercial business will be probably go toward offsetting "typically weak seasonality" in federal deal activity. Here, excluding the Titan Deal which begins in Q2, business has been "underwhelming," with federal contract data showing a "significant decline" year-over-year, albeit against a sequential uptick due to a "shutdown impacted" Q4.

All in, Radke sees the possibility for a modest ~1% topline beat in Q1 (consensus has $615 million). He attributes this outlook to a "stronger commercial ramp vs government and slightly higher profitability."

Consequently, Radke has made minor adjustments to his projections, culminating in a revised price target of $23 (up from $20). However, despite the upward revision, the new figure still suggests the stock is fully valued. Therefore, Radke maintains his Neutral rating on PLTR stock. (To watch Radke's track record, click here)

Overall, the majority on the Street remain Palantir skeptics. The stock has a Moderate Sell consensus rating, based on 6 Sells, 5 Holds and only 2 Buys. Going by the $19.67 average target, a year from now, the shares will be changing hands for ~21% discount. (See Palantir stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.