© Reuters. Palantir (PLTR) wins $115 Million U.S. Military contract extension, analysts divided on impression
Palantir (NYSE:) shares moved increased at first of Friday’s session after the corporate introduced a one-year extension of its partnership with the U.S. Military’s Program Government Workplace for Enterprise Info Methods (PEO EIS) value as much as $115 million.
The supplier of knowledge analytics and synthetic intelligence stated the contract contract consists of $35.6 million in preliminary funding and an award of $97.4 million.
Palantir shares hit a excessive of $19.15 early in Friday”s session earlier than falling again to across the $18 per share mark.
PLTR, which features a good portion of its income by way of authorities contracts, stated that beneath the prolonged deal, it can proceed to supply its open knowledge and analytics platform and provide new AI-enabled capabilities and open platform infrastructure.
“Palantir is honored to extend our work with the U.S. Army as it evolves into the Army Data Platform solution,” stated Akash Jain, President of Palantir USG. “This extension is evidence of the value we bring to the nation’s defense, including our joint efforts to provide more commercial technology providers the opportunity to equip soldiers with the innovation they need to meet their most pressing challenges.”
Following the information, analysts at William Blair maintained a long-held bearish view of the inventory, conserving an Underperform score on the shares.
The analysts said in a word that shares of Palantir “may start to reflect reality over the next three months once it is fully digested that the U.S. Army last night only awarded Palantir a short-term, one-year $115 million ceiling extension for Palantir’s second-largest contract on its books, the U.S. Army Vantage program.”
“When the Army originally gave Palantir the Vantage contract in December 2019, it awarded Palantir a $458 million four-year deal,” the analysts wrote. “That deal ended yesterday.”
“Not only was the duration for the new contract reduced, but the max annual run-rate was even slightly downsized from the prior $116 million revenue run-rate,” they added. “Palantir will likely not even receive the $115 million as the Army announcement indicated that is just a ceiling value. The Army has a track record of only awarding Palantir less than 60% of the potential value of ceiling contracts, with Project Maven, CD1, and CD2 as prominent examples.”
On the other finish of the spectrum, analysts at BofA maintained a Purchase score and $21 worth goal on the inventory, saying the one-year extension was sudden.
“The up to $115mn contract extension is in line with the annualized rate of the original contract award ($458mn), slightly below the annualized actual action obligation ($480mn) and 15% higher than Option year 2/3 average obligations. $35.6mn were obligated at the time of the award,” stated the analysts.
“We think that PLTR has a strong position to remain a key provider of data engineering & orchestration capabilities in a growing data-centric operational strategy. The recent contract extension and the fact that PLTR can add AIP capabilities to existing offerings support our thesis,” they argued.
