Palantir's move into the NHS

A potentially huge new and lucrative contract could significantly expand the Palantir's reach, but will the American firm fit Britain’s bureaucratic NHS?

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What's at stake?

Palantir is bidding on a £360M contract to provide AI-supported big data services to the UK’s National Health Service (NHS) through a new data tool the Government is seeking to implement. 

This tool, called Federated Data Platform (FDP), would manage and integrate patient and other data from the entire system. For comparison, Palantir reported $446M in sales last quarter, or about £362M. Understandably, getting this contract would be a major boon for the company, and is investing substantially in the success of its bid. Among measures taken include hiring former NHS staff to guide the bidding processes. A normal process in the US, but has raised some concerns among civil society opponents, who challenged Palantir's incursions into the NHS, while also citing the firm's ties to the US intelligence and security sector. 

Objections aside, Palantir has already been working with the NHS in providing data for the covid response. Palantir also provides similar services for US government-run health processes, Medicaid and Medicare. Current big data used by the NHS is provided by another brace of US firms: Google provides data analytics services, while Microsoft provides cloud hosting through its Azure program. Should Palantir prosper in getting the bid, Google's data arm would likely be the biggest loser.

Pivot, or building on prior success?

Palantir experienced substantial success during the pandemic, as its SaaS were in demand. But its reliance on US government contracts in the past partially explains why the growth of the company is slowing down in recent months. Its core base is still in defense software, particularly in detecting cyberthreats, which explains the increase in sales in the wake of the 2016 US elections. But government cybersecurity has limited growth potential, and moving into civil contracts would open up substantial new revenue sources. Particularly if Palantir can leverage its relatively small size to offer more customizable services than its larger competitors.

Reportedly, Palantir is to get the contract. But that doesn't mean it's a done deal, as the same firms that prevented a prior bid are already gearing up for another challenge. The difference this time is that Palantir has the success of supporting the vaccine rollout as an example of the kind of work it could do.

PLTR struggles to reverse

A recent bullish attempt at 10$ off the $6.50 low failed to attract more investors and the May gap got filled. Entering the $10-$15 range would be the first step to a chance at reversal, but the $17 resistance won’t be easy to break. There lies the 50-week average; it’s not only a multi-year support level.

On the contrary, losing the swing low at $6.50 opens up the path to $5.00. These are the prices of the first day of trading for the company, and it's all-time high, respectively.

Key takeaways

Palantir is bidding on a contract to provide AI-supported big data services to the NHS, but risks at home and abroad have popped up. The company realized success during the pandemic, but government contracts are not as conducive to high growth. Without moving to civil contracts PLTR’s outlook will mostly depend on the firm winning the NHS contract, as it would double its last year's sales.