Jul 7, 2022

general Analysis

[4 min Read]

You are probably aware that** Palantir Technologies Inc. (NYSE: PLTR)** is a leader in the Software—Infrastructure space. In this analysis, we are going to look at some of the key financial ratios for Palantir Technologies Inc. to determine a price prediction for PLTR. Remember these price predictions take into account several assumptions (which I will highlight) to determine a future price. I'll share my PLTR stock price prediction, then show you the approach and assumptions used to calculate the **PLTR stock forecast.**

Before we go any further, let me start by saying this, stock forecasting is hard. I don't know what the future will hold, and neither do Wall Street Analysts. If they could accurately predict the future, they would be able to beat the S&P 500 and I would be extremely wealthy. What I can say is that we can use available data to determine a reasonable PLTR stock forecast and helps us make better investment decisions, so hopefully, you find this analysis useful.

The Palantir Technologies Inc. stock price prediction of $13.36 was derived from 2 main valuation methods (which are averaged for the final price target you see above). I'll dive into the approach to show you how I determined how I “predicted” a stock price of $13.36 for PLTR.

- Palantir Technologies Inc. Financial Growth Metrics
- PLTR Comparable Companies Analysis

The Financial growth Metrics provide an analytics valuation approach to determining a reasonable PLTR stock forecast. The comparable companies analysis determines a PLTR stock forecast by comparing PLTR's financial ratios to the average financial ratios of a group of similar stocks.

For this part of the analysis, I am looking at the history of key financial metrics for Palantir Technologies Inc. to forecast the stock into 2022 and 2025. Most investors know that historical performance does not guarantee future performance, but it is useful to see how PLTR has been trending.

**PLTR's forward Earnings Per Share in 2025 are estimated to be $0.24**. Furthermore, with PLTR's forward P/E ratio is estimated to be 57.80, we have enough information to get a PLTR Stock Forecast for 2025. We can arrive at this estimate by multiplying PLTR's forward EPS by their forward P/E for a rough PLTR Stock Forecast of **$13.87 per share in 2025.**

There are other ways to predict the price for PLTR but I would argue that P/E, EPS, and Earnings Growth are the most commonly used financial metrics by analysts and investors. This is why I used them to forecast PLTR's stock price.

In order to undergo a comparable analysis, we need to outline PLTR's main competitors. These competitors need to have; a stock, valid financial ratios, operations similar to PLTR, and a market cap similar to PLTR (if possible).

By keeping this in mind, I found the following list of companies to be some of PLTR stock's closest competitors:

**Price to Book (P/B):**PLTR's current P/B ratio is 8.48, compared to the average P/B ratio of PLTR's peers being 12.09. This implies that PLTR is undervalued and their share price should change by a factor of 42.57% to be at fair value (based on PLTR's P/B compared to the P/B of their peers).**Price to Sales (P/S):**PLTR stock P/S ratio is currently 12.51, compared to the average P/S ratio of PLTR's peers being 14.06. This implies that PLTR is undervalued and their share price should change by a factor of 12.39% to be at fair value (based on PLTR's P/S compared to the P/S of their peers).

Overall, PLTR stock is overvalued and needs to experience a change in the stock price of (an average of) 27.48% to be considered “at fair value”. Applying this percentage change to PLTR's current price of $10.15 implies a forecasted price of $12.85.

Analyst Ratings have provided a relatively strong indicator of future price movement, which is why they are used to (hopefully) support our PLTR stock forecast. There are a total of 25 analyst ratings for PLTR, which are distributed as follows:

9 Buys

7 Holds

9 Sells

Analysts are very mixed when it comes to their PLTR ratings with exactly 9 "buy" ratings and 9 "sell" ratings. These ratings contradict each other, which makes it difficult to get a proxy of the analyst's sentiment. Furthermore, when we throw 7 analysts' "hold" ratings into the mix it just gets more confusing.

Should you buy PLTR? Well, based on the overall PLTR stock forecast of $13.36 per share, the underlying analysis, and the current price of PLTR, I would say PLTR is a buy (despite analyst confusion). PLTR is a growth stock so an investment in the PLTR stock is risky by nature. Make sure you do your own research in addition to this analysis to determine whether you agree/disagree with my conclusion.