The actions of Palantir Tchnl-A continue to rise and challenge the market, as analysts maintain the skepticism about your Very high valuation and sustainability of revenue growth according to Carmen Reinicke and Felice Maranz on Yahoo Finance.
Shares of the artificial intelligence software maker have up more than 250% this yearand much of the profits are due to the results from last weekwhich exceeded forecasts. Donald Trump’s election victory has also added momentum, with bulls pointing to management’s connections to Trump and the potential for an AI push by the new administration to boost sales.
The latest rally has further boosted Palantir’s already expensive valuation. The shares are traded at around 135 times forward earningsa huge premium compared to the average ratio of companies in the index Nasdaq 100of about 27 times. It is also the action most expensive of the S&P 500 index in terms of enterprise value to revenue. For some, the gains have gone too far, and two analysts downgraded the stock last week.
“The fundamentals are alive, but Palantir would have to accelerate the sales growth to 40% for four consecutive years and trade at 12 times its estimated 2028 earnings just to maintain its share price,” wrote the Jefferies analyst Brent Thillsaying this “seems unlikely.” The consensus estimates they are of growth 26% this year and 24% next year following, according to data compiled by Bloomberg. Thill downgraded the stock to a inferior performanceciting its unsustainable valuation.
He Argus Research analyst Joseph Bonnerechoed this sentiment. “Palantir stock, which has nearly tripled in value this year, may be outpacing what the company’s fundamentals can support,” Bonner wrote, lowering the stock’s recommendation to keep.
“Palantir specializes in serving a small segment of organizations with highly complex IT challenges, which could lead to uneven results that the market tends to punish in highly valued technology stocks,” Bonner added.
Wall Street’s ambivalence about stocks is reflected in analyst data tracked by Bloomberg. Of the 20 companies that cover the company, the half has qualifications of maintain or equivalentwhile three rate as buy and seven recommend selling. He average target implies a drop of 39%, a huge gap from current operations that can also be partly explained by Palantir’s base of retail investors, who are among its biggest supporters.
There are other signs that some think the rally has gone too far. According to data from S3 Partners LLClos short sellers who bet against Palantir have lost more than 3.6 billion dollars on paper this year, when stocks rose. But they are doubling down on their bets that stocks will fall, and data shows that the short interest as a percentage of Palantir’s float has increased from 2.8% at the beginning of September to 4.6% this week.
On the other hand, Trump’s decisive election victory has given bulls new reason for optimism about the company, which gains more than half of its revenue from government contracts.
Gil Luria from DA Davidsonwhich has a rating neutral on the stock, he believes Palantir benefits from the close ties to Trumpas CEO and co-founder Alex Karp, co-founder Joe Lonsdale and president Peter Thiel “are all very well connected to this administration.”
“Palantir’s vision is consistent with the ideology of Trump and his administration, particularly in regards to a clarity of vision around selling only to Western countries,” Luria said in an interview, adding that the company is “a standard bearer of America’s patriotic companies.
He analista de Wedbush Securities Dan Ivesa long-time Palantir fan, believes the company will be able win more government contracts in an AI push by the new administration. “We look forward to major AI initiatives within the US government, including the Department of Defense, which would also be a big boost.”
Still, even the Ives $57 price targetthe highest on Wall Street, has been eclipsed in the past week, underscoring the speed and magnitude of Palantir’s latest rally, and the challenge for investors in predicting the high.
Palantir Tchnl-A It is trading lower on Thursday afternoon at $59.90. The 70 and 200 period moving averages remain below the price, RSI is down at 80 points and the MACD lines are above the zero level.