Palantir wins $115 Million U.S. Army contract extension, analysts divided on impact By Investing.com

Palantir (NYSE:) shares moved greater at the beginning of Friday’s session after the corporate introduced a one-year extension of its partnership with the U.S. Military’s Program Govt Workplace for Enterprise Data Methods (PEO EIS) price as much as $115 million.

The supplier of knowledge analytics and synthetic intelligence mentioned 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 positive factors a good portion of its income through authorities contracts, mentioned that beneath the prolonged deal, it can proceed to offer its open information and analytics platform and provide new AI-enabled capabilities and open platform infrastructure.

“Palantir is honored to increase our work with the U.S. Military because it evolves into the Military Information Platform answer,” mentioned Akash Jain, President of Palantir USG. “This extension is proof of the worth we deliver to the nation’s protection, together with our joint efforts to offer extra industrial expertise suppliers the chance to equip troopers with the innovation they should meet their most urgent challenges.”

Following the information, analysts at William Blair maintained a long-held bearish view of the inventory, preserving an Underperform score on the shares.

The analysts acknowledged in a notice that shares of Palantir “might begin to mirror actuality over the following three months as soon as it’s absolutely digested that the U.S. Military final evening solely awarded Palantir a short-term, one-year $115 million ceiling extension for Palantir’s second-largest contract on its books, the U.S. Military Vantage program.”

“When the Military initially 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 solely was the length for the brand new contract decreased, however the max annual run-rate was even barely downsized from the prior $116 million income run-rate,” they added. “Palantir will doubtless not even obtain the $115 million because the Military announcement indicated that’s only a ceiling worth. The Military has a monitor report of solely awarding Palantir lower than 60% of the potential worth of ceiling contracts, with Mission Maven, CD1, and CD2 as distinguished examples.”

On the alternative 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 as much as $115mn contract extension is consistent with the annualized charge of the unique contract award ($458mn), barely beneath the annualized precise motion obligation ($480mn) and 15% greater than Choice yr 2/3 common obligations. $35.6mn have been obligated on the time of the award,” mentioned the analysts.

“We predict that PLTR has a robust place to stay a key supplier of knowledge engineering & orchestration capabilities in a rising data-centric operational technique. The current contract extension and the truth that PLTR can add AIP capabilities to current choices help our thesis,” they argued.