Palantia is underrated

The reason is that the company is projected to generate significant free cash flow (FCF) and FCF margins over the next year. As a result, I estimate that the company's share price could still reach $35 per share, which means an increase of more than 22% over the current price.

This article explains why.

On Tuesday, July 12, PLTR's stock price was $28.68, up 39% from the recent low of $20.60 on May 10.

I explained the intrinsic value of PLTR shares in the 5/28 Barchart article “Palantir Shares Still Have Room to Rise Based on FCF Margins — Short Put Strategies Work.”

The article stated that an FCF of 0.9 billion dollars can be generated based on a predicted FCF margin of 30% and a revenue run rate of 3 billion dollars. Based on an FCF yield valuation of 1.5%, PLTR shares could be worth $60 billion, or $26.92 per share.

Since this price target has been achieved, I would like to update my forecast and target stock price in this article. Updated FCF estimate analysts now predict that Palantir's earnings will rise to $3.25 billion next year,Forecast of $2.7 billion for 2024It has increased since.

If the 30% FCF margin is maintained in the future, the predicted FCF for 2025 will be 0.975 billion dollars (that is, 0.30 x 3.25 billion dollars = 0.975 billion dollars). This is significantly higher than the 0.9 billion dollar FCF used for the previous target stock price prediction.

As a result, using the 1.25% FCF yield assessment metric, Palantir could have a market value of $78 billion (i.e. $0.975 billion/ 0.0125 = $78 billion).

This is 8.33% higher than the previous target. Additionally, with today's market capitalization of $63.85 billion, PLTR shares are likely to be 22.16% higher than their current price.

As a result,Target share price will be $35 per share(So $28.68 x 1.2216 = $35.04).