Palantir (PLTR) said Friday it has received a one-year extension on a contract with the U.S. Army worth up to $115 million. PLTR stock rose in early trading before easing back.
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The analytics and artificial intelligence company is powering a data operations program called Army Vantage. The $115 million contract includes $35.6 million in initial funding and an award of $97.4 million, Palantir said.
On the stock market today, PLTR closed flat at 18.20.
PLTR Stock: Extension Of Four-Year Contract
Palantir garners nearly 60% of its revenue from government agencies. The previous deal between PLTR and the Army was for four years and $458 million.
Palantir’s news release described the extension as evidence of the company’s “success in empowering U.S. military decision-makers with actionable insights and advanced analytical capabilities through the delivery of a secure and open data environment.”
Raymond James analyst Brian Gesuale called the extension a “chill pill” for bears after worries, according to MarketWatch. Concerns about whether the contract would be renewed at the same value pushed PLTR stock down last week.
“All in, the win is in-line with our expectations and provides the Army another year to formalize structure for a successor multi-vendor contract,” Gesuale wrote in the client note, as quoted by MarketWatch.
On the other hand, William Blair analyst Louie DiPalma highlighted that the contract is shorter, indicative of a plan in the works to split the Army Vantage platform among multiple vendors.
“Not only was the duration for the new contract reduced, but the max annual run-rate was even slightly downsized from the prior $116 million revenue run-rate,” DiPalma wrote Friday. DiPalma holds an underperform rating on the stock, believing its valuation compared with its cash flow is too high.
PLTR Stock: Up 183% This Year
Palantir stock has gained 183% this year as of the market close Thursday. Further, Friday’s action briefly pushed PLTR above Thursday’s high of 18.58, breaking a recent downward-sloping trendline. PLTR stock is in a cup base with an entry point of 20.24, according to MarketSmith.
Further, PLTR stock has a 94 Composite Rating out of 99. And Palantir stock also has a 97 Relative Strength Rating.
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