Benchmark analyst Josh Sullivan reiterated the Buy rating on Planet Labs (NYSE:PL), with a price target of $5.
The analyst thinks PL is an under-appreciated AI play through ownership of unique real-time and historical global mapping data.
PL’s geospatial constellation real-time and historical images have created a powerful dataset to train AI.
The analyst notes that PL is now “indexing” the Earth for searchable items such as ships, planes, and missile silos.
As Alphabet Inc.’s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google “indexed” webpages to make the internet searchable, PL is making the Earth searchable for specific reference points instantaneously.
The analyst thinks only PL’s large-scale constellation can provide this data, and no competitor will ever be able to replicate the historical images to train AI.
Sullivan adds automating customer acquisition for smaller deals will free up the sales team for bigger deals and drive customer adoption.
The analyst believes that capex is a lever to dial up or down with growth [long-term 5%-8% of sales].
Net, net PL remains in a strong cash position ($368 million), ownership of a unique global dataset provides a defendable long-term AI play, CAPEX is set to normalize after FY24, and new geospatial products plus base business set to grow sales 20%+ CARG.
Sullivan is upbeat about PL’s FY25 targets, including adj EBITDA profitability and 20%+ annual revenue growth.
Price Action: PL shares are trading lower by 4.8% to $2.4750 on the last check Wednesday.
