Palantir (NYSE:PLTR) investors kicked off Monday on a high note, as the stock surged 14% during the session. That boost came after the announcement that the big data company will join the S&P 500, replacing American Airlines.
Getting added to the benchmark index is wholly deserved, says long-time bull, Wedbush analyst Daniel Ives.
“This was a moment that PLTR investors have been anxiously waiting for over the past year as the profitability profile of this story has significantly been bolstered with this another validation moment for the Palantir story,” the analyst said. “We believe many skeptics of Palantir have underestimated the profitability and cash flow potential of this name with AIP and the US commercial business a core driver of the business model going forward.”
Ives believes that as more companies seek to integrate AI solutions that deliver real-time value tailored to their specific operational needs, the current period will mark the beginning of a multi-year cycle for Palantir which will “continue generating significant deal flow on the back of AIP.”
But AIP’s impact is also set to resonate across the other part of Palantir’s business, namely its government work. As many government agencies are looking to adopt AI models to enhance their operational workloads over the coming years, Ives believes Palantir’s expanded product portfolio boasting advanced AI capabilities can be “safely, securely, and responsibly” deployed by the U.S. government, leaving the company poised for further momentum in the federal sector.
“In a nutshell,” the analyst summed up, “getting added to the S&P 500 Index is an important moment in the Palantir story that we believe marks a new era of enterprise growth and profitability over the next few years.”
As such, Ives kept his Outperform (i.e., Buy) rating intact, while his $38 price target remains the Street’s highest and is set to generate returns of 25% in the months ahead. (To watch Ives’ track record, click here)
Amongst Ives’ colleagues, 2 others join him in the bull camp but the majority are not nearly as confident. With an additional 5 Holds and 6 Sells, the stock claims a Hold consensus rating. Meanwhile, the average price target stands at $25.42, implying shares will see a downside of 26.5% over the next year. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
