The business momentum seems hard to sustain Palantir (PLTR.US) can it maintain its high valuation in Q3
1min read Palantir(PLTR.US) will report its Q3 earnings after the market closes on November 4. The market expects the company to generate revenue of $704 million in Q3, up 26.1% YoY; and expects EPS of $0.09, up 28.6% YoY.
In the past eight quarters, Palantir's EPS has exceeded expectations six times and its revenue seven times.
What does Wall Street think?
RBC Capital Markets continues to believe that Palantir's valuation is "unsustainable" unless there is a significant increase in Q3 results and an upgrade in the outlook.
The firm expects revenue from government sources to improve as management expects, but "given the intense competition outside of large non-technology companies and product market fit", the commercial momentum seems hard to sustain.
Mizuho has similar views and notes that "while Palantir has performed well recently, we remain concerned about the lack of transparency in its business and believe the current valuation is not justified."
However, analyst Michael Del Monte believes the company will achieve significant growth in both government and commercial customers, and its contract with AIP will expand and extend.
Another analyst takes a more cautious stance, expecting Palantir's free cash flow margin to remain robust and capital expenditure to remain low, but its valuation needs to be justified by more than 30% revenue growth.
