BofA raised its target price on Palantir shares. The bank saw two reasons for their upside of 18%

Bank of America has raised its target price on shares of Palantir, a developer of artificial intelligence for military and civilian needs. Now it expects the market value of the company to grow by another 18%. The investment bank noted Palantir's strong position in the government and commercial sectors, and cited its first billion-dollar contract with the UK Ministry of Defense and its unique team of AI engineers as key growth drivers. However, BofA's opinion differs from the majority on Wall Street: many analysts take a neutral stance and consider market expectations for Palantir to be overstated.

Analyst BofA raised its target price on shares of Palantir from $180 to $215 and reiterated a Buy rating on the stock, Barron's reports. The investment bank's new target implies an 18% increase in the company's market value from the closing level of September 23.

BofA believes that one of the drivers of the company's stock growth will be its success in the public sector. For example, last week, during Donald Trump's visit to London, Palantir received its first "billion-dollar contract" outside the US - a five-year agreement with the UK Ministry of Defense.

In addition, Palantir's stock will be boosted by its team of AI engineers called Forward Deployed Engineers (FDE), or "Delta," according to analysts at Bank of America. These specialists, unlike conventional developers, work directly with clients and tailor the company's AI-powered software to meet the specific needs of organizations, Barron's explained. This approach serves as a "growth gas pedal" for Palantir's business, especially in the commercial segment, according to BofA.

"By successfully deploying these breakthrough solutions within client companies, Palantir will benefit from increased demand, scalability, and engaged engineers who can focus on the most challenging problems," the BofA analyst said in a note cited by Barron's.

Against this backdrop, the bank also improved its profit and revenue forecasts for Palantir. Analysts now expect earnings of 85 cents per share in 2026 and $1.14 in 2027, up from 84 cents and $1.12 previously. The investment bank raised its average annual revenue growth expectations for the 2025-2030 period to about 35% from the previous 23%.

Palantir shares rose 1.8% to $182.55 in trading on September 23. This is the maximum closing price since August 13. Since the beginning of the year the market value of the company has grown by 141%. For comparison: the main U.S. stock index S&P 500 for the same period added 13%.

US aircraft maker Boeing announced on Tuesday that it has entered into an agreement with Palantir under which the companies will together integrate the latter's AI systems and software into Boeing's defense and space business. Financial terms of the deal were not disclosed in Boeing's announcement. Boeing shares rose 2% in trading on September 23.

Palantir shares are now trading at a forward P/E ratio of about 228 versus only 23 for the S&P 500 index, Barron's emphasized. Amid this "inflated" valuation, many on Wall Street are wary of the company's stock, the publication added. Thus, 18 out of 29 analysts following the dynamics of Palantir's securities advise investors to hold previously purchased shares in the portfolio (Hold). Another seven recommend buying (Buy and Overweight), and the remaining four suggest selling (Underweight and Sell).

Wall Street's consensus target price of $155.5 on Palantir's securities implies a more than 15% drop in the company's stock price.

This article was AI-translated and verified by a human editor