This article first appeared on GuruFocus.
Palantir Technologies (NASDAQ:PLTR) faces a cautious view from RBC Capital ahead of its second-quarter results, with the firm citing valuation and questions around commercial demand.
RBC maintained an Underperform rating and a $90 price target on Palantir. The firm pointed to the company's elevated valuation, with the stock trading at roughly 135 times earnings, as a key concern for investors ahead of the Aug. 3 earnings report.
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Palantir has continued to see increased government contract activity, according to RBC's government spending tracker. The firm said quarterly contract value and new annual contract value have risen amid continued geopolitical uncertainty.
Palantir's commercial business remains another area of concern. RBC said recent customer checks indicate some clients are reviewing their platform usage or weighing alternatives, raising questions about whether recent commercial momentum can continue.
Palantir shares also face heightened volatility around the earnings release. Options markets indicate the stock could move as much as 9% following the report.