Palantir’s Bulls and Bears

Goldman Sachs upgrades the recent IPO while Citi says Sell

Palantir Technologies Inc. (PLTR) builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations.

It offers Palantir Gotham, a software platform for government operatives in the defense and intelligence sectors, which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform.

The company also provides Palantir Foundry, a platform that transforms the ways organizations operate by creating a central operating system for their data; and allows individual users to integrate and analyze the data they need in one place. 

The company took the unusual route of becoming a public company by directly listing it’s shares and bypassing the brokers. Shares came public around $9 and shot up to $45 a share before pulling back. There were a number of brokers who made comments about the shares today following the company’s earnings.

Earnings

Palantir Technologies reported 4th Quarter December 2020 earnings of $0.07 per share on revenue of $322.1 million yesterday morning. The consensus earnings estimate was $0.02 per share on revenue of $300.4 million.

The company said it expects 2021 revenue of $1.42 billion or more. The current consensus revenue estimate is $1.41 billion for the year ending December 31, 2021.

Goldman Sachs

Goldman Sachs analyst Christopher #Merwin upgraded Palantir Technologies to Buy from Neutral with a price target of $34, up from $13. Palantir reported “strong” Q4 results and its Q1 guidance called for revenue growth of 45%, while fiscal 2021 revenue guidance was for 30%-plus, Merwin tells investors in a research note. The analyst is “encouraged” to see management guide to $4B of revenue in fiscal 2025, implying a 30% annual growth from fiscal 2020. With a growing backlog of $2.8B in deal value, there is increasing visibility into the achievability of that long-term target, says Merwin.

Further, the analyst believes Palantir’s recent efforts to modularize Foundry and add channel partners like IBM “should improve product market fit” for the commercial business in the coming quarters.

Morgan Stanley

Morgan Stanley analyst Keith #Weiss raised the firm’s price target on Palantir to $19 from $17, telling investors after the company’s Q4 report that Palantir’s results in FY20 showed a big expansion of existing customers, “huge leverage” in operating margins and the seeds for future distribution capability.

However, he keeps an Underweight rating on the shares as he would like to see evidence of effective investment behind the company’s opportunity to support growth and what he views as a “lofty valuation.”

Jefferies

Jefferies analyst Brent #Thill noted that Palantir reported a top and bottom line beat in Q4 along with “robust” large deal metrics and said it is targeting $4B or more in 2025 revenues, but that the stock remains under pressure due to Thursday’s lock-up expiry and the recent run-up that saw the stock up 35% year-to-date ahead of the report.

However, he views Palantir as “a highly unique story for long-term investors” given that he thinks its growth sustainability at significant scale, and “aggressive profitability ramp,” puts the stock “in rarified air” among software companies. Thill maintains a Buy rating on the stock, which he expects to “trend to $40,” his price target on Palantir shares.

RBC Capital

RBC Capital analyst Matthew #Hedberg raised the firm’s price target on Palantir to $27 from $15 and keeps a Sector Perform rating on the shares.

The company ended 2020 with a “solid” set of Q4 results while forecasting acceleration and margin improvement in Q1, the analyst tells investors in a research note. Hedberg adds however that while he is positive on Palantir’s catalysts, he remains on the sidelines due to the stock’s “full valuation”.

Citi

Citi analyst Tyler #Radke keeps a Sell rating on Palantir Technologies with a $15 price target following the company’s Q4 results.

The results featured “solid” reported revenue upside, but came with “signs of growth drivers narrowing with new customers growth still lacking and Commercial revenue missing expectations,” Radke tells investors in a research note.

The new five-year revenue target of $4B “looks high,” but ultimately may be a non-event for the stock, says the analyst. He thinks the stock is overvalued and “could be particularly volatile” into the upcoming lockup on February 18.

Insiders

Peter Thiel, Chairman, and well connected Washington insider

Several insiders have sold shares into the lockup expiry on Thursday but Peter Thiel, Chairman of the Board, reported a 5% ownership of the stock.

PLTR last traded at $28.50.

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Oil Prices Reach Pre-Pandemic Level

Front-month WTI oil futures rallied over 2% to a 13-month high at $60.95.

A flaring up in the Yemeni civil war boosted crude prices, in addition to reflation-trade positioning, which is being aided by the ongoing tumble in world-wide positive Covid test results (now one third the January peak), alongside optimism about vaccination programs and prospects of big stimulus spending in the U.S. and EU.

Crude oil reaches $61 per barrel

Taking step back, the question is how much higher can oil prices go in a sustained manner.

Crude markets are now well into pre-pandemic ranges, yet global demand is not likely be restored for a considerable time.

OPEC lowers demand forecast

OPEC last week cut its 2021 oil demand projection by about 100 M barrels per day due to more severe than anticipated lockdowns in major economies in the first half of the year.

This forecast still assumes a global economic recovery in the latter half of the year on the back of successful vaccination programs. This puts the focus on supply, leaving aside the impact of a softening dollar, which is only a part of the story and is in any case a partial by-product of the demand for oil and other assets in the global reflation trade.

Higher oil prices justify shale production

The OPEC+ group are limiting quotas, which are being reviewed on a monthly basis.

Saudi Arabia unilaterally complemented this regime with an additional two-month output cut, which took effect this month and which has more than offset rising supply out of Libya and Iran.

Without talking numbers, this supply restraint is evidently proving effective given the oil price rise and the recent corresponding draw downs in global crude inventories.

But, U.S. shale oil production, which is viable again after the surge in oil prices, is rising and will have increasing impact — the rig count is already up 70% since the 2020 lows.

This is something the EIA forecasted in its February oil market report.

Then there is there question of continued OPEC discipline.

Saudi Arabia is unlikely to extend its unilateral supply reduction beyond March, as it won’t want to give up market share.

Discipline among the OPEC+ nations will be a factor going forward, and is more likely to weaken than strengthen.

The Saudi-Russian price war last year illustrated how quickly the dam of quota curtailment can burst, although a repetition of that episode seems highly unlikely.

Overall, market sentiment remains strongly bullish.

JPM in a recent note forecast an “epic systemic short squeeze” will unfold over the next month, and a GS note mooted $150.0 as an upside target.

Analysts are less optimistic, being skeptical of the bullish supply gap hypothesis.

The oil industrial is well positioned, in terms of known and unexploited reserves, to respond to any sustained demand increases, while demand-quelling factors, such as the new trend for working from home, and alternative electrical powered transport is increasingly available.

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Rig Counts Continue to Rise!

Baker Hughes reports U.S. rig count up 5 to 397 rigs

Baker Hughes (BKR) reports that the U.S. rig count is up 5 from last week to 397 with oil rigs up 7 to 306, gas rigs down 2 to 90, and miscellaneous rigs unchanged at 1.

Oil Rigs, See Stockwinners.com Market Radar to read the latest on oil and rig count
Rig Counts Rise

The U.S. Rig Count is down 393 rigs from last year’s count of 790, with oil rigs down 372, gas rigs down 20 and miscellaneous rigs down 1.

The U.S. Offshore Rig Count is up 1 to 17, down 6 year-over-year. The Canada Rig Count is up 5 from last week to 176, with oil rigs up 6 to 101, gas rigs down 1 to 75.

The international offshore rig count for April 2018 was 194. Stockwinners
The international offshore rig count for April 2018 was 194.

The Canada Rig Count is down 79 rigs from last year’s count of 255, with oil rigs down 71, gas rigs down 8.

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets. The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

West Texas Intermediate (WTI) is up $1.24 to $59.48 per barrel. Brent crude is up $1.34 to $62.50 per barrel. Gasoline last traded at $1.69 per gallon.

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Rig Counts Rise!

Baker Hughes reports U.S. rig count up 8 to 392 rigs

Baker Hughes (BKR) reports that the U.S. rig count is up 8 from last week to 392 with oil rigs up 4 to 299, gas rigs up 4 to 92, and miscellaneous rigs unchanged at 1.

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Rig Counts Rise – See Stockwinners.com Market Radar to read more

The U.S. Rig Count is down 398 rigs from last year’s count of 790, with oil rigs down 377, gas rigs down 19 and miscellaneous rigs down 2.

The international offshore rig count for April 2018 was 194. Stockwinners
Offshore Rig Count is unchanged

The U.S. Offshore Rig Count is unchanged at 16, down 7 year-over-year. The Canada Rig Count is down 3 from last week to 171, with oil rigs down 3 to 95, gas rigs unchanged at 76.

The Canada Rig Count is down 86 rigs from last year’s count of 257, with oil rigs down 72, gas rigs down 14.

The Baker Hughes rig counts are counts of the number of drilling rigs actively exploring for or developing oil or natural gas in the U.S., Canada and international markets. The Company has issued the rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of the U.S. and Canadian drilling activity. The monthly international rig count was initiated in 1975.

West Texas Intermediate (WTI) is up 73 cents to $56.95 per barrel. Brent crude is up 50 cents to $59.50 per barrel. Gasoline last traded at $1.65 per gallon.

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.

Johnson & Johnson files for FDA approval of it’s Covid-19 Vaccine

 J&J submits FDA application for emergency use authorization for COVID-19 vaccine

Johnson & Johnson (JNJ) announced that Janssen Biotech, Inc., has submitted an application to the U.S. Food and Drug Administration requesting Emergency Use Authorization for its investigational single-dose Janssen COVID-19 vaccine candidate.

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JNJ files for approval of Covid-19 vaccine

The company’s EUA submission is based on topline efficacy and safety data from the Phase 3 ENSEMBLE clinical trial, demonstrating that the investigational single-dose vaccine met all primary and key secondary endpoints.

The Company expects to have product available to ship immediately following authorization. “Today’s submission for Emergency Use Authorization of our investigational single-shot COVID-19 vaccine is a pivotal step toward reducing the burden of disease for people globally and putting an end to the pandemic,” said Paul Stoffels, M.D., Vice Chairman of the Executive Committee and Chief Scientific Officer at Johnson & Johnson.

“Upon authorization of our investigational COVID-19 vaccine for emergency use, we are ready to begin shipping. With our submission to the FDA and our ongoing reviews with other health authorities around the world, we are working with great urgency to make our investigational vaccine available to the public as quickly as possible.”

Johnson & Johnson intends to distribute vaccine to the U.S. government immediately following authorization, and expects to supply 100 million doses to the U.S. in the first half of 2021.

JNJ last traded at $161.99.

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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.