Palantir Technologies (PLTR) is poised to benefit from a more streamlined government spending under President Donald Trump given its "unique software value proposition," Wedbush Securities said in a Monday note.

Wedbush said there were concerns over the impact of Trump's new five-year plan on Palantir, given the company's exposure to US government budgets and as the plan is estimated to cut defense spending by 8% per year or about $290 billion.

However, the investment firm said its conversations with government contacts indicated that the plan's focus on efficiency could play out for Palantir.

"Palantir is so well-positioned for this new disciplined spending environment at the Pentagon and this will ultimately be a positive growth catalyst," Wedbush said, noting that the company is also attached to high-priority contracts that are unlikely to get cut.

Wedbush reiterated its outperform rating and $120 price target on Palantir Technologies.

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