Palantir shares rise on deal with PG&E to enhance safety and reliability of California's electric grid
- Palantir jumped as much as 6% Tuesday after it announced a partnership with PG&E to improve the safety of California's electric grid.
- PG&E is set to use Palantir's Foundry software to streamline data management and collection.
- This comes just a week after Citi analysts downgraded Palantir to "sell" in a note that warned the stock could be "vulnerable" in 2021.
Shares of Palantir jumped over 6% Tuesday morning after it was announced the Denver-based company will partner with utility PG&E to enhance the safety and reliability of California's electric grid.
PG&E will use Palantir's Foundry software to help streamline its data management. Foundry provides a single, integrated platform that will allow PG&E decision-makers to navigate a real-time, operational picture of the power grid.
Olivier Farache, Palantir's Head of Utility Sector and Senior Advisor to the CEO, said of the deal: "Our engagement with California's largest investor-owned utility underlines our commitment to increasing safety and reliability for customers and communities across the region."
Farache continued: "It shows our Foundry software can power data-driven decisions that aim to improve service delivery."
Though the details have yet to be announced, the PG&E deal is reportedly a "multi-year, multi-million dollar" contract for Palantir.
Palantir hopes to help PG&E avoid the costly lawsuits that have plagued the utility by informing asset risk and outage investigations while bringing in as much data as possible to improve operational safety.
PG&E, California's largest investor-owned utility, has been embroiled in controversy after it was reported the company was responsible for over 1500 fires in its home state between 2014 and 2017 alone.
Fires sparkd by PG&E power lines during California's increasingly dry fire seasons have led the company to pay $25.5 billion for losses from devastating fires in 2017 and 2018.
Although PG&E has emerged from a recent Chapter 11 bankruptcy, it was required to pay $5.4 billion in initial funds and 22.19% of its stock into a trust for victims of wildfires caused by its equipment. The company also purged the majority of its board in 2020.
The news of a deal between Palantir and PG&E comes less than a week after Palantir was downgraded to "sell" from "neutral" by Citigroup.
Citi analyst Tyler Radke stated a bearish outlook on Palantir in a January 13 note, in which he called the stock "vulnerable" in 2021.
Still, Radke increased his price target for the big data company to $15 a share from $10.
"The bull case for PLTR rests on the ability to significantly expand its small about 130- customer base via the commercial segment by selling a more modularized product portfolio, which reduces friction. While this may be the right strategy, we are skeptical that this will be successful," Radke wrote.
Palantir trades at around $27 per share. The company boasts an average price target of $13.88 per share, including two "buy" ratings, three "sell" ratings, and three "neutral" ratings from analysts.