December 24, 2024
Chicago, IL – December 24, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Palantir Technologies Inc. PLTR and MicroStrategy Inc. MSTR.
Here are highlights from Monday’s Analyst Blog:
Following a meteoric rise this year, software company Palantir Technologies Inc. and bitcoin buyer MicroStrategy Inc. secured an inclusion in the Nasdaq 100. While Palantir's shares have soared 369.2% year to date, MicroStrategy's shares have climbed 476.6%.
The addition in the exclusive Nasdaq 100 reflects market confidence in Palantir and MicroStrategy's fundamentals. Moreover, their share prices will increase due to an uptick in demand from exchange-traded funds tracking the Nasdaq 100.
So, considering the Nasdaq 100's entry, one should ponder over which is a better buy in the new year. Let's see –
Palantir helps government and commercial customers optimally use data to solve problems efficiently and make judicious decisions. The demand for Palantir's Artificial Intelligence Platform (AIP) has skyrocketed, helping the company generate encouraging results in the past few quarters.
In the last reported quarter, revenues from commercial contracts jumped 54%, while government revenue growth surged 40%. Revenues improved as the company acquired new customers due to the immense popularity of AIP. Palantir also generated business from its existing clients since the net-dollar retention rate of 118% in the last reported quarter was up from 107% a year earlier.
Palantir's remaining deal value improved in the previous quarter, with analysts expecting the company's revenues to hit $2.8 billion this year, up 25% from $2.23 billion in 2023. Thus, PLTR's earnings per share are projected to increase by 31% compared to last year, with a Zacks Consensus Estimate of $0.38.
MicroStrategy's aggressive investment in Bitcoin (BTC) paid off as the world's numero uno cryptocurrency catapulted from a penny in 2009 to over $100,000 recently. MicroStrategy's decision to safeguard the value of its reserved assets by purchasing BTC boosted the attractiveness of its stock.
MicroStrategy is showing no sign of slowing down its BTC purchases. Over the next two years, MicroStrategy plans to raise $42 billion (including debt and equity) to bolster its BTC holdings and strengthen its position as the largest BTC treasury company. After all, Donald Trump's election victory increased optimism about easing roadblocks in the digital asset sector, driving up the BTC price.
MicroStrategy currently holds 439,000 BTCs worth $41 billion. The company's Nasdaq 100 inclusion will boost its liquidity, potentially fueling its BTC acquisition stratagem.
Even though inclusion in the Nasdaq 100 bodes well for MicroStrategy, investing in the stock is perilous due to its close ties with BTC, which is highly volatile. Whenever the BTC price pulls back, the MSTR stock witnesses wild price swings.
As seen recently, the BTC price declined 11%, leading to a 31% drop in the MSTR stock price. Additionally, MicroStrategy's core software sales declined 10% yearly in the previous quarter, a concerning trend.
On the other hand, steady growth of commercial customers and strong demand for AIP provide Palantir massive room for growth next year, which makes it a safer stock to bet on.
What's more, Palantir has been able to keep operational expenses under check and generate substantial profit from sales. Whereas, MicroStrategy's expenses have surpassed its revenues. This is because Palantir's net profit margin is a positive 18% and MicroStrategy's is a negative 87.1%.
Palantir, thus, rightfully has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here .
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