Analyst Optimism Returns for Palantir Following Key Upgrade and Airbus Deal

Mizuho Securities upgrades Palantir to 'Outperform' with a $195 price target, citing a compelling entry point after a steep pullback. The outlook is bolstered by an extended strategic partnership with Airbus.

A significant upgrade from a major investment bank and a renewed strategic partnership are fueling a more positive outlook for Palantir Technologies Inc. The data analytics firm, whose shares have faced pressure this year, is now being viewed by some market experts as presenting a compelling opportunity.

Mizuho Securities Shifts to Bullish Stance

On February 18, analysts at Mizuho Securities upgraded their rating on Palantir from Neutral to "Outperform," establishing a price target of $195 per share. This target implies a potential upside of 44% from the stock’s closing price on the preceding Wednesday. The bank’s research team justified their optimistic call by highlighting Palantir’s unique market position, noting that the company delivers a rare combination within the software sector of revenue growth, acceleration, and margin expansion.

The timing of this upgrade is particularly notable. Palantir's stock has declined approximately 35% from its November peak and is down about 24% for the year-to-date period. Mizuho’s assessment suggests this recent pullback has been overdone, creating an attractive entry point for investors.

Strategic Partnership with Airbus Extended

Adding to the positive momentum, Palantir announced on February 10 the extension of its multi-year collaboration with aerospace giant Airbus. The two companies will continue their joint development of the Skywise data platform, which aggregates flight and operational data from aircraft. The partnership aims to enhance the efficiency of aircraft design and optimize operations for airline customers. Josh Harris, Executive Vice-President at Palantir, described the ongoing work as part of a "bold vision" to redefine the role of technology in commercial aviation.

A Growing Chorus of Favorable Views

Mizuho’s upgrade follows other recent positive analyst actions. Earlier in February, Daiwa Capital Markets also raised its rating to "Buy," albeit while reducing its price target from $200 to $180. Daiwa cited Palantir’s 70% year-over-year revenue growth for the fourth quarter and a 2.1-fold increase in operating income as key drivers for their recommendation. Freedom Capital Markets subsequently echoed this sentiment, characterizing the stock’s recent decline as an "unjustified" pullback that represents a buying opportunity.

Valuation Debate Persists

Despite these upgrades, analyst opinions on Palantir remain divided. Among eight analysts with current ratings, half recommend buying the shares while the other half maintain a neutral stance. The average price target among these analysts stands at just over $207. However, with a market capitalization of approximately $323 billion and a price-to-earnings ratio exceeding 200, the stock’s valuation continues to be a point of contention for market participants.