Planet Labs Navigating Extended Defense Sales Cycles: Analyst Cuts Price Target By 23%

Benchmark analyst Josh Sullivan reiterated a Buy rating on the shares of Planet Labs PBC PL and lowered the price target from $6.5 to $5.

PL reported 2QFY24 revenues of $53.8 million versus the Street’s $54.1 million.

FY24 revenue guidance was reduced below the Street’s

 view, due to defense sales cycles extending.

For the year, net dollar retention rate (NDR) was lowered to 115% due to the delay of an eight figure ACV expansion opportunity with a large government customer, noted the analyst.

Also Read: These Analysts Cut Their Forecasts On Planet Labs After Weak Q2 Results

With the recent restructuring, PL will enter FY25 with a $35 million reduction in annual operating expenses run-rate versus the start of FY24.

The analyst noted that PL has also realigned resources focusing on its highest priority growth areas defense & intelligence, civil government and agriculture solutions.

The analyst believes that as macros and extending sales cycles lean on the industry at large, PL is in a position to control costs while playing consolidator of attractive but financially stressed assets.

The reduction in price target reflects the softening outlook near-term, said the analyst.

Piece Action: PL shares are trading lower by 13.3% at $2.67 on the last check Friday.