Wall Street analyst downgrades Palantir stock forecasts 50% drop
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Palantir’s (NYSE: PLTR) surging stock price to new highs may not last long after investment banking giant Jefferies downgraded the equity due to concerns over growth prospects. Jefferies’ analyst Brent Thill downgraded the stock from ‘Hold’ to ‘Underperform,’ warning that the firm might not meet the growth expectations implied by its current valuation, he said in an investor note on November 7. Thill maintained his price target of $28, emphasizing that Palantir faces a significant challenge justifying its high revenue multiple. If this target is attained, it would reflect a 50% drop in PLTR from the current value. “We are downgrading PLTR to Underperform due to an unsustainable valuation and will await a more favorable entry point. Our $28 price target reflects a 19x CY25E revenue multiple, compared to the large-cap average of 12x,” the analyst said. The expert observed that Palantir is currently trading at 38 times its estimated 2025 revenue—a valuation Jefferies says is double that of the following most expensive software stock, CrowdStrike (NASDAQ: CRWD). According to Jefferies’ research, for Palantir to sustain such a premium, it would need to grow revenue by 40% annually for the next four years, a target Jefferies finds unlikely to achieve consistently. An increase in insider sales, mainly through 10b5-1 trading plans, has added to Jefferies’ concerns. These plans allow company insiders to schedule share sales over time, often indicating that executives see limited upside at current price levels. Notably, the company’s CEO, Alex Karp, is among the executives on a recent selling spree. Wall Street increasingly cautious on PLTR Other Wall Street analysts have also questioned whether Palantir’s rapid rise is justified. Mizuho’s Dan Moskowitz highlighted that PLTR’s valuation is over three times the average of other enterprise software stocks, maintaining a ‘Sell’ rating despite raising his price target from…
Filed under: News - @ November 7, 2024 1:27 pm