TLDR
- Citi analyst Tyler Radke raised revenue growth estimates for Palantir to 53% for fiscal 2027, vs Wall Street’s 45% consensus
- Radke reiterated a Buy rating but cut his price target to $200 from $225 due to multiple compression
- Citi expects US Commercial growth to rebound after a Q1 slowdown, driven by AIP expansion across new industries
- Intra-quarter checks with partners and management were described as “largely positive” across both commercial and federal segments
- PLTR’s free cash flow margin averaged 54.1% over the last year, among the best in software
Palantir Technologies (PLTR) is drawing fresh analyst attention Thursday after Citi raised its earnings estimates ahead of the company’s upcoming quarterly report. PLTR was trading around $131.82, down roughly 20.5% over the past six months.
Palantir Technologies Inc., PLTR
Citi analyst Tyler Radke kept his Buy rating on the stock but trimmed his price target to $200 from $225, pointing to multiple compression as the reason for the cut.
Despite the lower target, Radke’s underlying outlook is more optimistic than the Street. He now models 53% revenue growth for fiscal 2027, well ahead of Wall Street’s consensus estimate of around 45%.
The bullish case centers on a rebound in Palantir’s US Commercial segment. That division hit an unexpected speed bump in Q1, but Radke believes the slowdown was temporary.
“We expect US Commercial to rebound after an unexpected deceleration in Q1, driven by improved resource prioritization and AIP proliferation across new industries and geographies,” Radke wrote in a note to clients.
He expects US Commercial Remaining Deal Value net adds to bounce back to the $800M-plus range seen in the second half of 2025, which he says should drive further upward estimate revisions heading into 2027.
What the Checks Are Saying
Radke said intra-quarter conversations with partners and management were “largely positive.” He pointed to continued momentum from global systems integrators and independent software vendors.
Key customer wins from AIPCon 10 were highlighted, particularly in the Legal and neocloud verticals. On the international side, Radke flagged a large insurance win in Mexico and a deepening relationship with Nvidia in the Sovereign segment.
On the federal side, Radke noted expanding use cases within the Department of Defense at the AWS Summit. He also said the USDA contract could provide continued tailwinds in the second half of the year.
Radke acknowledged that competitive displacements have increased but said the growing set of reference customers should sustain momentum.
The Underlying Financials
Palantir’s billings came in at $1.74 billion in Q1, with year-over-year growth averaging 67.6% over the last four quarters.
The company’s customer acquisition cost payback period was 5.3 months this quarter, which is fast by enterprise software standards. That efficiency gives Palantir more room to invest in new products without leaning heavily on sales and marketing spend.
Free cash flow margin averaged 54.1% over the trailing twelve months, placing it among the top performers in the software sector.
At current levels, the stock trades at 40.5x forward price-to-sales.
Citi noted that PLTR’s post-Q1 underperformance — down 8% versus the IGV index up 6% — makes the risk/reward setup more attractive heading into the next report.
Radke added that feedback from CFO Dave Glazer gave the firm more confidence in the commercial rebound thesis.
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