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Goldman Sachs analyst Christopher Merwin upgraded Palantir Technologies (PLTR) to Buy from Neutral with a price target of $34, up from $13. The stock closed Tuesday down 13% to $27.84.

Palantir reported "strong" Q4 results and its Q1 guidance called for revenue growth of 45%, while fiscal 2021 revenue guidance was for 30%-plus, Merwin tells investors in a research note. The analyst is "encouraged" to see management guide to $4B of revenue in fiscal 2025, implying a 30% annual growth from fiscal 2020.

With a growing backlog of $2.8B in deal value, there is increasing visibility into the achievability of that long-term target, says Merwin. Further, the analyst believes Palantir's recent efforts to modularize Foundry and add channel partners like IBM "should improve product-market fit" for the commercial business in the coming quarters.