Data mining software company Palantir Technologies is popular among retail investors, but Bank of America says it is still misunderstood by many on Wall Street.
In a note on Tuesday, analysts pointed out that a 1980 estimate of mobile phone users in 2000 was only 900,000. The actual number of mobile subscriptions that year was more than 100 million. Meanwhile, such early predictions also failed to see the advent of mobile apps and smart devices.
“We see Palantir’s (PLTR) capabilities, technology and path forward facing a similar fundamental misunderstanding,” wrote BofA analysts led by Mariana Perez Mora. “The impending S&P 500 inclusion offers a watershed moment for institutional investors to rethink what they ‘know’ about PLTR.”
BofA reiterated its buy rating on Palantir shares and raised its price target to $50 from $30. The new target represents a 40.5% upside from the stock’s closing price on Friday. And that comes after shares soared last week on news that the company would join the S&P 500 later this month and have more than doubled year to date.
A major misconception on Wall Street is Palantir’s unconventional sales strategy, which places engineers at the forefront. While investors have said the approach limits scalability and profitability, BofA disagrees.
“We believe this approach makes PLTR solutions significantly more relevant to users and gives PLTR stronger pricing power,” the note said. “Engineers create intimacy with the customer’s mission and help shape the product to add real value.”
Meanwhile, Palantir is gaining customers in the public and private sectors, and BofA sees a major opportunity for the company to become the common operational data system for the U.S. government and large U.S. companies.
Palantir is known for its work in defense and intelligence, but is also expanding into the commercial sector.
In honor of Palantir’s addition to the S&P 500, CEO Alex Karp took a victory lap in a video posted Tuesday. He also nodded to Wall Street’s misconceptions about the company, which developed and delivered products with a decade’s head start on rivals, allowing entire enterprises to use AI and large language models.
“It’s still radical to the point that people don’t quite understand it,” Karp said. “They don’t understand how we flipped a switch and went to GAAP profitability. And from what adults, professional managers and some analysts thought was a Frankenstein monster, led by a freak show leader — me — to a dynamic, clearly profitable company that is worthy of being admitted to the S&P 500.”
Palantir followed its own path along the way, ignoring conventional wisdom, he added, while praising the retail investors who had faith in the company.
“Everyone in the company and around the world should celebrate that the rebels have won,” he said.
This story originally appeared on Fortune.com
