Palantir Technologies Stock Forecast: PLTR contracts boost price, but momentum pushing toward $17.06

Palantir Technologies (PLTR) rose more than 1% to $19.58 on Thursday's open after the stock announced two new contracts. The big data cruncher is up 106% year to date, compared with the S&P 500's 35%, despite falling into a ditch this fall after drawing the dreaded head-and-shoulders pattern over the summer. The stock is down about 25% in the past three weeks.

Palantir Technologies (PLTR) Stock News: A new contract, a new extension

On Thursday morning Palantir announced a string of new contracts. First, a new contract with natural gas pipeline major Kinder Morgan has Palantir integrating its Foundry software into Kinder's pipeline storage management system. The multi-year contract does not have a reported value, but Kinder Morgan said the partnership would help it meet safety and efficiency goals.

From the press release: "With real-time access to this information, Foundry will enable Kinder Morgan to make data-driven decisions on gas storage, optimization and maintenance scheduling."

Mark Huse, Kinder Morgan’s CIO, said, "In our business, we put a premium on doing things safely. To be able to also move at such speed is extremely valuable."

Secondly, Space Systems Command, the US military's space system operations division, has given Palantir a $43 million contract extension. Cumulatively, Palantir has now been awarded $91.5 million in total from Space Systems Command.

According to Palantir, "This award provides continued capabilities for Project Brown Heron, which enables all-domain situational awareness and decision-making at NORAD/USNORTHCOM (N-NC), and the Space C2 division under the Cross Mission Ground & Communications Enterprise (ECX). The Palantir platform, known as Warp Core, is being utilized to make decisions from large volumes of data in support of these missions."

PLTR key statistics

Palantir Technologies (PLTR) Stock Forecast: A beeline to $17.06

Since Palantir stock broke support at $20.55, which had remained the lowest share price since mid-July, the prospect of dropping at least until the May 11 low of $17.06 seems all the more likely. A price-to-sales ratio of 27 and a forward P/E ratio above 100 make the stock seem too expensive at a moment when growth stocks are suffering due to the Federal Reserve signalling a coming rise in interest rates.

June, September and late October/early November saw the completion of a head-and-shoulders pattern with both shoulders below the September head price level. This is a major bearish signal, and technical traders were bowing out by mid-November.

Analysts are quite bearish on PLTR at the moment even though the average price target remains at $23.81. It has not helped that insiders at Palantir have sold more than $127 million worth of stock during the fourth quarter thus far. CEO Alexander Karp sold nearly $50 million in November alone.

FXStreet view: Do not go long PLTR until at least $17.06. Even then, use a stop.

PLTR 1-day chart

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