Palantir's Q2 Surge Drives 36% Target Price Hike by Citibank

Palantir Technologies Inc. (PLTR.US) has recently seen a significant adjustment in its target price by Citibank, which raised it from 115 USD to 158 USD while maintaining a "hold" rating. This move comes on the heels of Palantir's second-quarter performance, which exceeded expectations, particularly in the U.S. market. The company's revenue from both commercial and government sectors showed substantial growth, with a notable increase in order volume and operating profit margins. The U.S. commercial market, in particular, contributed significantly to this growth, with a 93% increase in revenue compared to the previous quarter's 71%.

Despite the strong performance in the U.S., Palantir faces challenges in its international operations. The company reported a year-over-year decline in international commercial revenue, highlighting the difficulties in expanding overseas. This has led to a cautious outlook from Citibank, which maintains a "hold" rating despite the positive domestic performance. The company's management has also revised its revenue guidance for the fiscal year 2025, projecting it to be between 4.142 billion USD and 4.150 billion USD. This adjustment reflects the company's confidence in its growth prospects, driven by its core products, Palantir Gotham and Palantir Foundry, which continue to support business expansion.

Other Wall Street analysts have also updated their ratings for Palantir. Morgan Stanley maintained a "hold" rating but raised its target price from 98 USD to 155 USD, citing a 50% year-over-year increase in revenue guidance for the third quarter and a 45% increase in revenue growth for 2025. The company's 46% operating profit margin, which is industry-leading, further supports its position as a leader in the artificial intelligence sector. Piper Sandler, on the other hand, upgraded its rating to "overweight" and raised its target price from 170 USD to 182 USD. The firm highlighted the significance of a 100 million USD contract with the U.S. Army, which validates Palantir's ability to expand its market share in the defense sector. The company's 93% growth in U.S. commercial business further underscores the attractiveness of its AI platform to large enterprise clients.

Cantor Fitzgerald also reaffirmed its "neutral" rating but increased its target price from 110 USD to 155 USD. The firm's analysis suggests that while the U.S. commercial business has shown strong growth, the company's strategic focus on the U.S. market is expected to continue, with U.S. revenue potentially reaching 80% of total revenue by the end of 2026. This shift in focus is driven by the company's strong performance in the U.S. market, which has been a key driver of its growth. However, the firm maintains a "neutral" rating due to the current valuation, which it believes already reflects the company's leading position in the industry.

Overall, Wall Street analysts are bullish on Palantir's prospects in the U.S. market, citing its strong growth and profitability. However, the company's challenges in the international market remain a concern. Despite these challenges, Palantir's position as a leader in AI-driven industry transformation is widely recognized, and its growth potential is seen as significant. The company's ability to navigate these challenges and capitalize on its strengths in the U.S. market will be crucial to its long-term success.