Top Investor Asserts ‘Palantir Moment’ Unlikely for BBAI Stock
BigBear.ai (NYSE:BBAI) faces challenges that make its comparison to Palantir (NASDAQ:PLTR) difficult. While both companies aim to serve government and commercial clients with AI-driven solutions, BigBear.ai lags significantly behind Palantir in key financial metrics.
Current Market Position
As of now, BigBear.ai has a market capitalization of $2.36 billion. For the third quarter, it reported a revenue of $33.1 million. In contrast, Palantir boasts a market cap of $369 billion and revenue of $1.18 billion during the same period. Moreover, Palantir achieved $476 million in net income, highlighting a stark difference in profitability.
Diverging Financial Trends
Investor Robert Izquierdo emphasizes the contrasting sales performance between the two companies. Palantir’s revenue surged by 63% year-over-year, marking its second consecutive billion-dollar quarter. Conversely, BigBear.ai experienced a 20% decrease in sales during the same quarter.
Impacts of Government Budget Cuts
The decline in BigBear.ai’s revenue is attributed to budget cuts affecting its contracts with the U.S. Army. In sharp contrast, Palantir’s U.S. government sales increased by 52% last quarter, suggesting a stronger reliance on their solutions.
Challenges and Opportunities
Izquierdo points out that BigBear.ai’s lack of profitability raises concerns, especially as net losses are projected to rise in 2025. However, there are positive developments ahead. BigBear.ai recently acquired Ask Sage, a generative AI platform boasting 100,000 users across 16,000 U.S. government teams. This acquisition is considered a promising move that could potentially boost revenue.
Future Projections
If Ask Sage reaches its predicted annual recurring revenue of $25 million by 2025, this would represent a significant sixfold increase from 2024. Such growth could signal a potential turnaround for BigBear.ai.
Wall Street Sentiment
Current analyst sentiment towards BBAI appears cautious. In the past three months, only two analysts have provided input: one maintains a Buy rating while the other suggests a Hold. This leads to a Moderate Buy consensus for BigBear.ai, with an average 12-month price target of $6.50, indicating a possible upside of 20%.
- Market Capitalization: $2.36 billion (BBAI) vs. $369 billion (PLTR)
- Q3 Revenue: $33.1 million (BBAI) vs. $1.18 billion (PLTR)
- Q3 Net Income: $0 (BBAI) vs. $476 million (PLTR)
- Sales Growth: Down 20% (BBAI) vs. Up 63% (PLTR)
- Projected Revenue from Ask Sage: $25 million in 2025
- Analyst Consensus: Moderate Buy
- Average Price Target: $6.50
In conclusion, while BigBear.ai has potential growth avenues, immediate comparisons to Palantir’s successes seem premature. Investors are advised to monitor performance closely to gauge future movements in stock value.
