Palantir's 'egregiously rich valuation' draws downgrade to sell

By Steve Gelsi

Monness Crespi Hardt analyst cuts AI software company's rating to bring it 'back to reality'

Palantir Technologies Inc. stock fell Thursday after it drew a downgrade to sell from neutral at Monness, Crespi, Hardt & Co., as analysts took aim at the AI software company's "egregiously rich valuation."

With a year-to-date rise of about 43% and a gain of nearly 200% in the past year, Palantir Technologies (PLTR) may have to face realities of a potential economic downturn, analyst Brian White said.

Palantir Tech's stock was down by 6% in afternoon trades on Thursday on volume of about 44 million shares. The stock generates average daily volume of 69 million shares.

While Palantir remains well positioned to profit from the long-term AI trend, revenue from government-related contracts has been lumpy, execution spotty and its valuation is now excessive even as a potential recession looms, he said.

"We believe the darkest days of this economic downturn are ahead of us," White said.

White set a target price of $20 a share for Palantir. That's more than $4 below where the stock traded on Wednesday.

Overall, Palantir's stock has seen a "meteoric rise on the Gen AI rocket" but now it's time to return to reality, White said.

At last check, Palantir had a market capitalization of $55 billion. That's about 21 times its projected 2024 revenue of $2.67 billion.

Also read: Palantir's biggest stock-market bull ups the ante after 54% rally this year

-Steve Gelsi

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03-28-24 1327ET

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