On Thursday, Citi reaffirmed its Neutral rating and a $20.00 price target on Palantir Technologies Inc . (NYSE:PLTR) stock, following the announcement of the company's new contract with the US Army. The agreement, part of the TITAN program, is valued at up to $178 million over a 24-month period, equating to an approximate annual contract value (ACV) of $90 million.
This deal is considered additional to Palantir's existing projects with the Army and is expected to positively impact the company's US Government revenue. Palantir's US Government revenue growth had significantly declined, from over 20% in the first quarter of 2023 to mid-single digits in the fourth quarter of 2023.
The contract is believed to have been factored into the company's guidance, with indications from December that a decision would be reached in the first quarter of 2024.
The revenue from the TITAN contract is part of Palantir's projected growth for 2024, which also anticipates a significant contribution from its international commercial sector, expected to bring in over $240 million in incremental revenue. The TITAN deal represents approximately 27% of this anticipated incremental revenue.
Despite the new contract and its potential to boost revenue, Citi suggests that the over 10% surge in Palantir's stock price may be excessive. The firm notes that the valuation of Palantir has now surpassed that of other market data benchmarks, implying skepticism about the sustainability of the stock's recent performance.
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