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‘Losing its Shine’: Palantir Stock Downgraded to Underperform at RBC; Other Analysts Lower PTs

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© Reuters. ‘Losing its Shine’: Palantir (PLTR) Stock Downgraded to Underperform at RBC; Other Analysts Lower PTs

Palantir (NYSE:PLTR) stock closed 21.3% lower on Monday after disappointing results and Q3 guidance that trailed Wall Street Expectations.

As a result, RBC analyst Rishi Jaluria downgraded shares to Underperform from Sector Perform with a $6.00 per share price target, down from $12.00. The analyst has “decreased confidence in PLTR achieving its 30%+ growth target.”

“Although we expected PLTR near-term upside from US federal budgets being passed in mid-March and ongoing geopolitical tensions overseas, results were disappointing to us given: 1) 1Q topline lacked upside to consensus; 2) 2Q guide missed consensus on both revenue growth & profitability; and 3) Total Deal Value growth ex ‘investment agreements’ declined both Y/Y and Q/Q. The lone positive was mgmt’s decision to wind down the investment program but this doesn’t change the underlying business fundamentals,” Jaluria said in a client note.

Citi analyst Tyler Radke cut the PT to $7.00 per share from $10.00 on further slowing growth and weaker profitability.

“Palantir’s underlying growth continued to slow in Q1 with the smallest quarterly revenue beat to date and Q3 guidance below the street and the company’s 30% target. Growth metrics, when adjusted for SPAC revenue, looked even worse with minimal commercial deal value growth, and incremental slowdowns in total/commercial revenue. While management expressed optimism in Government growth rebounding in 2H from budget resolution and ongoing Ukraine conflict, it’s difficult to put much confidence in this with most Q2 leading indicators suggesting slowing growth, and incrementally weaker profitability,” the analyst told clients.

Radke also caught up with PLTR’s management after the Q1 call. Key takeaways are:

  • No change to guidance philosophy;
  • Management remains confident in growth re-accelerating in 2H;
  • Margins should recover in the back-half as PLTR incurred some upfront incremental expenses from the Ukraine situation;
  • The Q2 guidance only includes contracts that management has a high degree of certainty of closing.

By Senad Karaahmetovic

 

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Walmart stores expected to post high shopper traffic amid deepening inflation pain

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© Reuters. FILE PHOTO: A worker and a shopper are seen wearing masks at a Walmart store, in North Brunswick, New Jersey, U.S. July 20, 2020. REUTERS/Eduardo Munoz

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By Arriana McLymore and Aishwarya Venugopal

NEW YORK, NY (Reuters) – Walmart (NYSE:WMT) Inc is expected to show a steady rise in gross margins and revenue when it reports first-quarter results on Tuesday as price conscious shoppers, feeling the strain of persistent inflation, increase visits to the low-cost retailer.

Walmart has averaged a 4.9% increase in monthly visits since the start of 2022 compared to the same period in 2021, Placer.ai data showed, despite supply chain challenges and pricier fuel that have led shoppers to make fewer grocery store trips.

Analysts have also been upbeat about Walmart’s ability to diversify its revenue base through advertising and to keep prices low when compared with rivals that are struggling.

“What we found is pricing is still lowest at Walmart and they’ve done a very good job of keeping prices low to maintain and widen the price gaps with the competition and providing the best value for the consumer, even in an inflationary environment,” Telsey Advisory group analyst Joseph Feldman said.

Guggenheim analysts said Walmart is a “top pick” during inflationary times, in a note on Monday.

“We believe Walmart will continue to deliver impressive top- and bottom-line performance amidst the evolving pandemic environment regardless of tougher consumer spending patterns.”

Investors are already piling in. Walmart’s stock is up about 2% on the year to Friday, in contrast to the S&P 500‘s nearly 16% decline.

Grocery prices shot up 10.8% in April, the largest year-over-year jump since 1980, while the cost of a gallon of gas fell 6.1% but was still up nearly 44% from a year ago.

Walmart Chief Financial Officer Brett Biggs in March said that consumers were keeping their eyes on inflation and that rising fuel prices would cause consolidation in shopping trips.

“You’ll tend to see fewer trips. You’ll tend to see bigger baskets, which again, bigger baskets is really our sweet spot,” Biggs said at a Bank of America (NYSE:BAC) Conference.

Refinitiv estimates the Bentonville, Arkansas-based retailer will eke out gross margins of 24.55% in the quarter, up from 24.43% in the previous quarter, with revenue rising 0.4% to $138.883 billion. Earnings per share are estimated to be $1.48, down from $1.69 last year.

“Walmart stands to benefit from increasing trip consolidation, a healthy price gap to national chains, and accelerating inflation trends,” Gordon Haskett analyst Chuck Grom said.

The company has set its sights on growing its $12.99-a-month Walmart Plus membership to challenge Amazon (NASDAQ:AMZN)’s Prime, priced at $14.99 monthly. Walmart Plus, which launched in September 2020, offers delivery services and gas discounts but is still struggling to make ground against Amazon.

A recent report by eMarketer citing Bizrate showed that only 15% of U.S. adults used Walmart’s Plus service compared to 62% for Amazon’s Prime.

(This story corrects last name of Walmart CFO to “Biggs” from “Briggs” in paragraph 9 and 10)

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India’s Life Insurance Corp set for lacklustre market debut, analysts say

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© Reuters. FILE PHOTO: Life Insurance Corporation of India (LIC) logo is seen displayed on a smartphone in this illustration taken February 20, 2022. REUTERS/Dado Ruvic/Illustration

By Nupur Anand and Chris Thomas

MUMBAI (Reuters) – Life Insurance Corp is likely to see a lacklustre debut when it lists on Indian stock exchanges on Tuesday despite the $2.7 billion initial public offering being oversubscribed, analysts said.

India priced LIC’s record-breaking IPO last week at 949 Indian rupees ($12.20), the top of the indicated range. The government has raised around $2.7 billion from selling a 3.5% stake in LIC, the country’s top insurer, which is state owned.

But volatility in global markets and selling pressure in the domestic stock market are likely to cast a shadow on LIC’s listing, with the shares likely to start trading near the IPO price or at a slight discount.

“Unofficial grey premium is trading down into negative territory mainly on the back of depressed global markets which are in the bearish zone … We expect a soft listing at +/- 5% of the offer price,” said Prashanth Tapse, research analyst at domestic brokerage Mehta Equities.

New Delhi had planned to list LIC in March this year but had to defer it as market conditions were not favourable in the wake of the Ukraine conflict.

The offering is seen as being important to India meeting its ambitious target for selling off state assets. The debut performance will also set the mood for forthcoming issues after retail investors were badly burnt by India’s recent large IPOs.

The price range for the issue was set between 902 and 949 rupees per share. LIC offered a discount to employees and retail investors of 45 rupees per share, while policyholders were given a discount of 60 rupees per share.

In the grey market, LIC shares were trading at a discount of nearly 15 rupees compared with a premium of nearly 100 rupees earlier this month.

“Even if the shares list flat on Tuesday, retail investors will still be able to make gains due to the discount that was offered so I don’t see it as a bad bet as valuations are also attractive,” Narendra Solanki, fundamental research head at domestic brokerage Anand Rathi.

The 66-year-old company dominates India’s insurance sector, with more than 280 million policies.

IPO MARKET SLOWDOWN

The Indian IPO market, which saw dizzying growth in 2021, has had a significant slowdown this year. This shows the impact of geopolitical tensions, stock market volatility, a price correction in over-valued stocks from recent IPOs, plus concerns about rising commodity and energy prices, and slower economic growth, EY said in a report on Monday.

In the first quarter of 2022, proceeds raised through India’s primary markets were at $995 million via the three largest IPOs compared with $2.57 billion same period last year, EY said.

If market conditions improve there could be a robust pipeline of IPOs this year as more than 20 companies have filed draft prospectuses in first quarter of this year, Sandip Khetan, Partner and Financial Accounting Advisory Services Leader, EY India said.

($1 = 77.7840 Indian rupees)

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Trump’s social media app may raise up to $50 million before deal closes -filing says

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© Reuters. FILE PHOTO: The Truth social network logo is seen displayed behind a woman holding a smartphone in this picture illustration taken February 21, 2022. REUTERS/Dado Ruvic/Illustration

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By Echo Wang

(Reuters) – Former U.S. President Donald Trump’s new social media venture disclosed in a regulatory filing on Monday it may raise up to $50 million through convertible notes before it merges with a blank-check acquisition firm.

Truth Media & Technology Group (TMTG) is set to receive $1.25 billion in funding once it merges with Digital World Acquisition Corp. But the deal, which was inked in October, has been under investigation by the U.S. Securities and Exchange Commission (SEC). The funds are inaccessible to Trump’s company until the SEC gives the green light and the transaction closes.

TMTG, which according to the filing posted an operating loss in 2021 of $4.3 million, had to secure other funding as a result. It raised $38.2 million as of March 31 through the issuance of convertible promissory notes, the filing shows.

The filing reveals that the maximum TMTG can raise though convertible notes is $50 million.

The rollout of Trump’s social media app, Truth Social, has been slow after it was launched earlier this year. Trump only started using the platform frequently this month. Two top executives left less than a year after they joined the company, Reuters previously reported.

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