Morgan Stanley Raises Planet Labs Target to $35

Planet Labs PBC (NYSE:PL) has staged one of the more dramatic recoveries in the small-cap space over the past year. Shares have gained nearly 812% over the trailing 12 months, rising from $4.00 to a 52-week high of $36.38. Year to date, the stock is up more than 78%, including more than 50% just in the past week.

The Street consensus target sits at $31.11. Morgan Stanley just raised its price target to $35, implying additional upside to the $35 target. But can PL realistically reach $35 by end of 2026?

Morgan Stanley’s $35 PL Prediction

Morgan Stanley raised its price target on Planet Labs to $35 from $26 while maintaining an Equal Weight rating. The firm cites record backlog of approximately $900 million as the primary support for growth visibility, alongside strong demand across Defense and Intelligence and traction in Satellite Services. The analyst acknowledges the bull case is tempered by investment-driven margin pressure weighing on near-term profitability, explaining the decision to hold rather than upgrade despite the higher target.

Key Drivers of PL Stock Performance

1. Government and defense contract momentum: Planet Labs has secured high-value government awards, including a $12.8M NGA Luno B contract for AI-enabled Maritime Domain Awareness, a $13.2M NRO renewal, a $13.5M NASA task order, and a €240M multi-year German government agreement. This government-heavy revenue base provides contract durability that supports long-term compounding.
2. AI-enabled solutions and next-generation satellite capacity: The company launched Pelican-3 and Pelican-4 via SpaceX on November 28, 2025 and acquired Bedrock Research to accelerate AI for remote sensing. A Google partnership to explore TPU-powered AI computing in space targets prototype launches in 2027, positioning Planet Labs at the intersection of satellite data and AI with expanding addressable markets.
3. Revenue predictability through backlog growth: Remaining Performance Obligations reached $672.47M, up 361% year-over-year, and 97% of annual contract value is recurring. Full-year FY2026 revenue guidance of $297M-$301M reflects accelerating growth from $244.35M in FY2025.

What Will It Take for PL to Reach $35?

With 317.6 million shares outstanding, a $35 price target implies a market capitalization of approximately $11.1 billion, modestly above the current $10.1 billion market cap. Reaching that level likely requires continued backlog conversion into revenue, stabilization or improvement in gross margins from 57% non-GAAP gross margin, and sustained adjusted EBITDA profitability after the expected Q4 FY2026 dip. Management has guided for adjusted EBITDA of $6M-$8M for the full year, with a long-term gross margin target of 70% to 80%.

The primary risk is government contract exposure, since U.S. federal contracts carry termination-for-convenience clauses that could reduce backlog with limited notice. Even so, Morgan Stanley’s revised $35 target reflects a credible thesis: a company with record contracted revenue, accelerating AI-enabled solutions, and a satellite fleet expanding at scale.