For investors evaluating growth stocks in the current market, comparing Palantir Technologies (NYSE:PLTR) and Salesforce (NYSE:CRM) offers valuable insights. Both companies are significant players in their respective fields, but their recent performances and future prospects present contrasting investment opportunities. This analysis delves into a comparative look at PLTR and CRM, examining key financial metrics and analyst ratings to inform investment decisions.
Palantir Technologies (NYSE:PLTR) Analysis
Palantir’s first-quarter earnings revealed a 40% year-over-year growth in its Commercial division, generating $150 million in revenue. While substantial, this growth rate represents a deceleration from the 70% growth observed in the previous quarter. A more compelling metric for Palantir may be its total contract value, which demonstrated a robust 131% year-over-year increase, surpassing the 107% gain in the fourth quarter. These figures suggest promising long-term potential for Palantir.
Alt: Palantir Technologies (PLTR) stock price chart showing recent performance and trends.
However, the current stock price might not represent an ideal entry point for investors. Analyst consensus on Palantir Technologies stock is currently a Hold rating, based on a consensus of opinions over the last three months. This includes ratings from various analysts, with a spectrum of views ranging from Buy to Sell recommendations. The average Palantir Technologies stock price target is $22.11, suggesting a modest upside potential of approximately 2.9% from the recent trading price. This relatively small potential upside, coupled with concerns about valuation, might make investors cautious about immediate investment in PLTR.
Salesforce (NYSE:CRM) Analysis
In contrast to Palantir, Salesforce presents a different investment narrative. Despite a recent post-earnings stock plunge, Salesforce appears to be more reasonably valued, especially when considering its GAAP P/E ratio of around 41x after its latest earnings release. The market’s reaction to Salesforce’s first revenue miss since 2006, causing the stock to drop significantly, might be an overreaction, given the company’s underlying strengths and market position.
Salesforce’s earnings report revealed adjusted earnings of $2.44 per share on $9.13 billion in revenue, slightly missing revenue expectations of $9.15 billion but exceeding earnings expectations of $2.37 per share. Furthermore, while the guidance for the current quarter fell slightly short of analyst expectations, there were significant positive aspects within the earnings report.
Alt: Salesforce (CRM) stock performance chart with analyst ratings and price targets indicating moderate buy consensus.
Notably, Salesforce demonstrated a substantial increase in profitability, with GAAP net income surging to $1.53 billion, or $1.56 per share, compared to $199 million, or 20 cents per share, in the same quarter the previous year. Salesforce also raised its full-year earnings guidance, projecting adjusted earnings between $9.86 and $9.94 per share, up from the previous forecast. Analyst consensus for Salesforce stock is a Moderate Buy rating, supported by a significant number of Buy ratings and no Sell ratings in the last three months. The average Salesforce stock price target is $296.89, indicating a substantial upside potential of approximately 31%. This significant potential upside, coupled with a more reasonable valuation after the stock sell-off, suggests a compelling investment opportunity in CRM.
Conclusion: Neutral on PLTR, Bullish on CRM
Considering the comparative analysis of NYSE:PLTR and NYSE:CRM, Salesforce appears to be a more attractive investment at the current juncture. While Palantir shows promise in its contract value growth, its valuation and modest price target upside suggest a neutral stance is warranted until a more favorable entry price emerges. On the other hand, Salesforce’s recent stock decline, despite strong underlying performance and increased profitability, presents a potential buy-the-dip scenario. The company’s robust long-term track record and significant upside potential indicated by analyst price targets support a bullish outlook on CRM stock. For investors seeking growth with more immediate value, CRM currently appears to be the more compelling choice compared to PLTR.
