The market is undervaluing Palantir – BofA

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BofA analysts raised the firm’s price target on Palantir (NYSE:PLTR) to $14 from $13 in a note Thursday and said that the market value is currently missing key aspects of the company.

“Palantir (PLTR) stock declined 11.5% on Monday (vs. S&P 500 +1.0%) on concerns about growth. The market reaction was a deja-vu to last four release dates when PLTR underperformed the market by ~14ppts,” wrote the analysts. “What mostly surprises us is the lack of incremental concerns around the stock, even around growth.”

The analysts also noted that BofA’s sum of the parts analysis suggests that at the current stock price, “you get Commercial & Cash for free.”

“As global recession risks and interest rates increase, we view cash as increasingly important to the strength of a company. Palantir ended the quarter with $2.4bn in cash (no debt) and has access to extra liquidity of up to $950mn. A more robust than peers’ balance sheet should allow them to better navigate the potential headwinds from a global recession and conduct less aggressive price agreements to capture the disruption opportunity for the future,” added the analysts.

Palantir shares have jumped more than 9% in Thursday’s session.

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