On Wednesday, RBC Capital maintained its Underperform rating and $5.00 stock price target on shares of Palantir Technologies Inc . (NYSE:PLTR), despite the company securing a significant contract with the U.S. Army. Palantir's stock saw an 11% intraday increase compared to the 1% rise in the iShares Expanded Tech-Software Sector ETF (IGV).
The contract, valued at approximately $178.4 million, is for the next prototype phase of the Army's TITAN program. This phase aims to provide the Army with an AI/ML-enabled predictive capability, which is expected to be the Army's first AI-defined vehicle.
Despite this development, RBC Capital suggests the contract's value was likely already factored into Palantir's guidance for 2024, leading to questions about the stock's movement.
Palantir, in collaboration with Raytheon (NYSE:RTN), was previously awarded a $36 million contract in July 2022 to develop a prototype for the TITAN program, which is a ground intelligence system incorporating artificial intelligence and machine learning. The recent announcement confirms Palantir as the sole participant for the next phase, with the contract spread over two years, equating to $89.2 million annually.
The contract covers the development of 10 TITAN prototypes and lays the groundwork for Palantir to integrate sensor data with the Army's systems. Palantir has mentioned this as one of the significant government programs it is involved in, alongside others like CD-1, AIDP, Vantage, and JADC2.
The deal, initially anticipated in 2023, underscores Palantir's ongoing relationship with government defense programs.
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