On Tuesday, Palantir Technologies Inc. (PLTR) stock surged, with investors likely driven by comments from the CEO about potential mergers and acquisitions (M&A). The data-analytics software company reported its first-ever profitable quarter on a GAAP basis, and CEO Alex Karp hinted at M&A interest in the company. Palantir opened at $8.75, up 1.14 (14.91%), with a volume of 132.79M and P/E ratio of N/A. Its market cap was $15.83B and closed at $8.84, higher than its opening rate of $8.59. Karp also told CNBC that there is “growing M&A interest” in the company.
Palantir’s stock rose 10%, to $8.37, on Tuesday, despite a 40% drop in its share price over the past 12 months. Analysts at William Blair Investment speculated that the share move was potentially due to the anticipation of a possible acquisition. This was further supported by the company’s fourth-quarter earnings, which were mixed. Palantir stated that they are set to become profitable on a GAAP basis by 2023, but the first-quarter revenue guidance was lower than Wall Street’s expectations. Additionally, their fourth-quarter net income of $31 million was supplemented by a single-time benefit from the consolidation of a Japanese joint venture.
RBC Capital Markets’ analysts, headed by Rishi Jaluria, noted that Palantir’s fourth quarter and calendar year 2023 guidance for the top line was weak, although the profits were higher than expected. They maintained an Underperform rating on the stock. Furthermore, Mizuho Securities stated that Palantir’s revenue was still unpredictable and driven by major corporate and government transactions. They kept a Neutral rating, but raised their target price from $7.00 to $8.00 in line with the sales multiples of other Software-as-a-Service companies.
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