Palantir’s price target upped at BofA on rising US growth, competitive advantage

Palantir Technologies (NYSE:PLTR) rose about 3% premarket after Bank of America reiterated its Buy rating and upped its price target to $75 from $55 on the software company, citing accelerated U.S. growth and widening “competitive moat.”

The analysts noted Palantir has shown its ability to digitize enterprises and battle-spaces from finances to missile production. “In a world where, efficiency, innovation, safety, and speed are the most valuable assets, we see Palantir as the enabler and winner in this new era,” said the analysts.

The analysts raising the next three-year Government growth to 29% from 24%. Software has become a critical asset in industrial production, enabling automation, data analysis, real-time monitoring, and process control. Software represents 17% of US nonresidential private fixed investments, versus 11% in 2005, according to the analysts.

The analysts think Palantir is poised to dominate as companies turn to software and AI to grow margins, rather than through scale with fixed assets. The complexity of the company’s Ontology is invaluable to operationalize generative AI as it embraces the security, governance, and data-robustness challenges.

BofA noted that even with the surge of new commercial customers, partners, and distribution channels, it sees a long runway ahead. The analysts raised their next three-year Commercial growth to 34% from 32%.

The analysts think Palantir’s penetration in both government and commercial applications is in the early innings. The incremental value-adding use cases and increased interoperability are critical for continued penetration and upselling opportunities.

In addition, the analysts said that after transferring the listing to the Nasdaq, Palantir expects to meet the eligibility requirements of the NASDAQ 100 Index. The potential inclusion poses a catalyst for price appreciation.