PLTR
The market’s favorite pricey software name got a haircut
Palantir has spent the year looking less like a rocket ship and more like a stock market piñata. After last year’s monster run, investors have rotated out of high-growth software names and taken profits, which has pushed PLTR down enough to make it look a little less absurdly expensive than it used to be.
The headline here isn’t that Palantir is cheap — let’s not get carried away. It still trades at a trailing P/E of 129 and a forward P/E of 83, which is basically the financial equivalent of paying first-class prices for a middle seat. But those multiples are way below last year’s peak and now sit at their lowest levels in more than three years.
Why investors are suddenly paying attention
The real catalyst is earnings, which are due on Monday. Wall Street is expecting:
- about $1.8 billion in revenue, roughly 80% growth year over year
- third-quarter revenue guidance near $2.0 billion, implying another 70% growth clip
- EPS of 35 cents, up from 16 cents a year ago
That’s the kind of growth profile that keeps the bulls caffeinated. Palantir also tends to beat estimates, and options traders are leaning bullish too, with a put/call ratio of 0.47 on contracts expiring later this week. Translation: plenty of traders are betting the post-earnings move goes up, not down.
The big question: expensive, or just misunderstood?
Analysts are still pretty upbeat, with an average price target around $190 and Rosenblatt recently reiterating a Buy with a $225 target. The logic is simple: Palantir’s U.S. government and commercial businesses are still growing like weeds in spring.
Big picture: Palantir doesn’t need to be “cheap” to rally — it just needs earnings to prove the growth story is still intact. If it does, the market may keep pretending the valuation monster in the closet isn’t there. If it doesn’t, well… software stocks can get humbled fast.