Shares of Palantir Technologies (PLTR, Financial) were up 4% on Wednesday after Raymond James maintained a "Market Perform" rating on the stock as it revised the company's financial projections.
The adjustments are due to the vesting of approximately $120 million in stock appreciation rights (SARs), which begin to vest when Palantir shares are worth $50 or greater in Q4 2024. The trade-off with these rights recalibrated earnings expectations for the period linked to the company's performance metrics.
Raymond James' updated model calls for Palantir's GAAP earnings per share (EPS) to shrink in the fourth quarter. New stock compensation expenses were folded into the estimate, which has been revised downward from an earlier prediction of $0.06 to $0.01 per share.
Although it is still at the expense of many shareholders, this financial update shows that increasing equity-linked compensation bodes more for Palantir's bottom line than selling six per cent of its stock to a buoyant investor class possibly could. Market optimism about Palantir's data analytics capabilities, along with its expanding presence in the firm's enterprise and government, has helped underpin the stock's resilience.
The EPS revision doesn't seem to bother investors who are banking on Palantir's long-term growth potential in artificial intelligence and big data solutions. Analysts monitor the company for near-term adjustments, and earnings are due for further scrutiny in upcoming reports.
