To The Moon

To forecast Palantir Technologies (PLTR) stock price in one year based on its current two-quarter price-to-earnings-to-growth (PEG) ratio and assuming a 30% PEG growth, we need to analyze the available data and make reasonable assumptions. Below is a step-by-step approach:

Step 1: Gather Current Data

Current Stock Price: As of May 13, 2025, PLTR's stock price is approximately $128.10.

PEG Ratio: The PEG ratio for PLTR is 6.08 as of May 13, 2025.

P/E Ratio: The trailing twelve months (TTM) price-to-earnings (P/E) ratio is 556.96.

Earnings Per Share (EPS): The TTM EPS is $0.19.

Revenue Growth: Palantir's full-year revenue growth guidance for 2025 is 36%.

Analyst Price Targets: The consensus average one-year price target is $98.56, with a range from $39.57 to $150.00.

Step 2: Understand PEG and Assumptions

The PEG ratio is calculated as:

\text{PEG} = \frac{\text{P/E Ratio}}{\text{Annual EPS Growth Rate (\%})}

A PEG ratio of 6.08 suggests that the stock is trading at a high multiple relative to its earnings growth, indicating potential overvaluation unless growth accelerates significantly.

The EPS growth rate increases by 30% annually.

The P/E ratio expands by 30% due to market sentiment or valuation changes.

The PEG ratio itself increases by 30%, implying a change in the P/E-to-growth relationship.

Given the context, the most reasonable interpretation is that the EPS growth rate is expected to grow by 30% annually, as this aligns with forecasting based on earnings growth. However, we’ll also consider the possibility of PEG ratio growth for completeness.

Step 3: Calculate Current EPS Growth Rate

Using the current PEG ratio:

\text{PEG} = \frac{\text{P/E}}{\text{EPS Growth Rate}}

6.08 = \frac{556.96}{\text{EPS Growth Rate}}

\text{EPS Growth Rate} = \frac{556.96}{6.08} \approx 91.6\%

This suggests Palantir’s TTM EPS growth rate is approximately 91.6%, which is high but plausible given its revenue growth (36%) and improving margins (profit margin of 16.13%).

Step 4: Forecast EPS Growth with 30% Increase

Assuming the EPS growth rate increases by 30%:

\text{New EPS Growth Rate} = 91.6\% \times (1 + 0.30) = 91.6\% \times 1.3 = 119.08\%

So, the forecasted EPS growth rate for the next year is approximately 119.08%.

Step 5: Forecast Future EPS

Current TTM EPS is $0.19. Assuming EPS grows at 119.08% over the next year:

\text{Future EPS} = 0.19 \times (1 + 1.1908) = 0.19 \times 2.1908 \approx 0.4162

Step 6: Estimate Future P/E Ratio

The current P/E ratio is 556.96, which is extremely high, reflecting market expectations of significant future growth. To forecast the stock price, we need to estimate the future P/E ratio. Two approaches:

Maintain Current P/E: Assume the market continues to value PLTR at a P/E of 556.96.

Adjust P/E Based on PEG Growth: If the PEG ratio grows by 30%, we calculate a new PEG and derive the P/E.

Option 1: Maintain Current P/E

\text{Future Stock Price} = \text{Future EPS} \times \text{P/E} = 0.4162 \times 556.96 \approx 231.79

This suggests a stock price of approximately $231.79 in one year, an 81% increase from $128.10.

Option 2: PEG Ratio Grows by 30%

If the PEG ratio increases by 30%:

\text{New PEG} = 6.08 \times 1.3 = 7.904

Using the forecasted EPS growth rate of 119.08%:

\text{New P/E} = \text{New PEG} \times \text{EPS Growth Rate} = 7.904 \times 119.08 \approx 941.29

\text{Future Stock Price} = 0.4162 \times 941.29 \approx 391.77

This suggests a stock price of approximately $391.77, a 206% increase, which seems overly optimistic given analyst targets.

Step 7: Compare with Analyst Forecasts

Analyst price targets range from $39.57 to $150.00, with a median of $100.00 and an average of $98.56. These targets suggest a 23% downside to significant upside. The $231.79 forecast aligns with bullish scenarios but is well above the consensus, while $391.77 is far beyond even the high-end target of $150.00.

Step 8: Consider Market and Valuation Risks

High Valuation: A P/E of 556.96 (or 941.29 in the second scenario) is unsustainable unless earnings growth accelerates dramatically.

Revenue Growth: Palantir’s 36% revenue growth supports strong EPS growth, but a 119% EPS growth rate assumes significant margin expansion.

Market Sentiment: PLTR’s 380% gain in 2024 and 41.84% YTD in 2025 suggest speculative fervor, which could drive prices higher or lead to corrections.

Final Answer

Based on the current two-quarter PEG ratio of 6.08 and assuming a 30% increase in EPS growth rate (to 119.08%), the forecasted stock price in one year is approximately $231.79, assuming the P/E ratio remains at 556.96. If the PEG ratio itself grows by 30%, the price could reach $391.77, but this is less likely given analyst targets and valuation constraints.

However, considering analyst consensus ($98.56–$100.00) and the risk of P/E compression, a more conservative estimate aligning with bullish analyst targets is $150.00, reflecting a 17% upside from $128.10.

Final Forecast: $150.00 (high-end analyst target, balancing growth and valuation risks).

Seems like the valuation is at its peak. Tsla grew exponentially during it's earlier days, I hope Pltr outperform these calculation. I wish it will hit $400 by EOY 2025 (Feb 2026). What are your views?