Analyst Note| Mark Cash |
We are raising our fair value estimate for narrow-moat Palantir Technologies to $28 from $25, based on higher growth expectations after its second-quarter results topped our expectations for revenue growth and adjusted earnings. Strong growth and heavy sales and marketing investments are expected to continue in the third quarter, and Palantir doubled its previously guided adjusted free cash flow for 2021 to at least $300 million. We believe the concerted efforts in ramping up the salesforce and channel partners are gaining traction, and nice customer count additions in the quarter showcase Palantir lowering the barriers to product adoption. We think Palantir is uniquely positioned to help solve complex data integration and analytics challenges and is in the early stages of scaling its solutions across industries. Shares increased by more than 10% after the strong results, and we view shares as slightly undervalued.