Today we’re pitting analyst against analyst, as one Wall Street expert seems to like Palantir Technologies (NYSE:PLTR) while another is decidedly cautious. At the same time, PLTR stock could get a nice boost as it secures a deal with the U.S. military that’s worth many millions of dollars.

Palantir offers an array of tech-focused solutions to its clients. Specifically, it is known as a provider of security products and services. However, the company also offers autonomous software management solutions.

It’s a great business model for a high-conviction company — or at least, some people think so. Granted, not every analyst is a huge fan of Palantir Technologies. Still, it’s encouraging to know the company has a lucrative deal with the biggest client of them all: the U.S. government.

What’s Happening with PLTR Stock?
Recently trading near $10, PLTR stock look very cheap compared to its 52-week high of $29.29. Palantir’s $23 billion market capitalization could and should be just a distant memory someday.

For the time being, though, traders should consider both the bullish and the bearish arguments regarding Palantir. In the bearish camp is Monness, Crespi, Hardt & Co. analyst Brian White. Not long ago, he downgraded Palantir shares from “buy” to “neutral.”

Why did White downgrade PLTR stock? Apparently, he’s concerned that for “next-gen software companies that are still trying to gain credibility with investors” such as Palantir, the “last several months have been harrowing, and the economic road ahead appears treacherous.”

Additionally, White warns that “the global economy appears to be in a downward spiral, and we expect this will create headwinds for the company.” This is quite a gloomy outlook, to say the least. Really, it’s easy to imagine that a “downward spiral” would impact not only Palantir, but practically every company in America.

A Compelling Risk-Reward
White’s point is duly noted, but let’s see what a bullish analyst has to say. Raymond James analyst Brian Gesuale evidently envisions an opportunity with PLTR stock now. He’s got stats to back up his optimism, too. Gesuale sees the “risk/reward as compelling for a software business with a ~30% growth rate, gross margin structure in the 80% range with escalating contribution margins, and a balanced commercial and government customer mix.”

Speaking of government customers, Palantir Technologies just inked a deal with the U.S. Army Research Laboratory. Palantir will implement data as well as artificial intelligence, or AI, and machine learning capabilities for users across the combatant commands, according to the press release.

It’s a huge win for Palantir, as the two-year contract is worth $99.9 million. With this major revenue source in mind, it’s not difficult to agree with Gesuale’s “strong buy” rating and $20 price target for PLTR stock.

What You Can Do Now With PLTR Stock
Getting a contract with the U.S. military that’s worth nearly $100 million is an exciting development for Palantir. Just that alone might turn some skeptics into prospective investors.

At the same time, it’s fine to take note of both the bullish and the bearish arguments. Then, you can come up with your own assessment. Right now, though, it’s hard to resist the conclusion that PLTR stock is worth owning.

— David Moadel

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Source: Investor Place