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Shares of $Palantir Technologies(PLTR.US)$ are up 4% today after Bank of America (NYSE:BAC) upgraded PLTR stock to a "buy" recommendation.

Bank of America said the Denver, Colorado-based data analytics company should benefit from growing demand for artificial intelligence platforms. The firm also noted PLTR stock offers an attractive entry price for investors at its current level of $8.84 per share.

Bank of America placed a $13 price target on Palantir stock, representing nearly 58% upside from its closing price at the end of last week. Before today, Palantir's share price had fallen 56% year-to-date and was down nearly 70% from a year ago.

What Happened

Bank of America initiated coverage of Palantir with a contrarian "buy" rating, drawing the attention of investors in the process. Bank of America forecasts brighter days ahead for the company that was co-founded by investor Peter Thiel and is named after a magical stone from The Lord of the Rings series.

Currently, the bulk of Palantir's revenue comes from contracts it has with governments around the world, notably in the U.S. and United Kingdom. The company analyzes vast amounts of data, including for U.S. intelligence and defense agencies. The firm expects PLTR stock to rise as it diversifies its business to include more private sector companies and as demand for artificial intelligence grows exponentially.

However, despite Bank of America's bullish rating, the company continues to struggle to meet Wall Street expectations. At the start of May, PLTR stock fell 21% in a single trading session after the company delivered a weaker-than-expected revenue outlook and missed analyst forecasts for its first-quarter financial results. Palantir reported earnings per share (EPS) of 2 cents versus an expected 4 cents, according to Refinitiv data.

Palantir's Q1 revenue came in at $446 million versus the $443 million that was expected on the Street. Worse, the company forecast $470 million of revenue for the second quarter, which is below analyst expectations of $483.7 million.

Other Analyst Ratings of PLTR Stock

Bank of America isn't the only firm to update its rating on PLTR stock recently. Other ratings on the company's shares include the following:

• Morgan Stanley (NYSE:MS) has an "equal weight" rating and a $16 price target on Palantir stock, implying 81% upside from current levels.

• Piper Sandler (NYSE:PIPR) holds an "overweight" rating on PLTR stock and also has a $16 price target on the shares.

• Monness Crespi & Hardt recently initiated coverage of Palantir with a "buy" rating and a $20 price target, which would be 126% higher than where the stock currently trades.

The median price target on PLTR stock is currently $11 per share, which implies 24% growth over the next 12 months. The stock currently has six "hold" ratings, four "buy" ratings and three "sell" ratings.

While Palantir might have a bright future, its stock is held back by the fact the company continues to miss Wall Street expectations for its earnings.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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