Palantir Technologies (NYSE: PLTR) stock plunged over 6% on Thursday after it received the first Wall Street downgrade in over a month. The analyst behind the rating cut also set a new price target, suggesting a potential downside risk of nearly 20%.
Brian White, an analyst at Monness, Crespi, and Hardt, has downgraded Palantir (PLTR) stock from “Neutral” to “Sell,” citing concerns over its “egregiously rich valuation.” This downgrade comes after the stock surged 200% in the past year due to its AI initiatives.
White issued a 12-month price target of $20 for PLTR stock, suggesting an approximate 18% downside risk from its recent closing price. In a note to investors, the analyst acknowledged Palantir’s positioning to benefit from the long-term AI trend and capitalize on volatile geopolitics. However, he highlighted challenges such as inconsistent government contract revenues, uneven execution, and the company’s high valuation, especially amidst looming economic uncertainty.
This marks the first downgrade for PLTR since February. At the time, HSBC analysts had downgraded the Palantir stock rating from “Buy” to “Hold.”
Analysts Remain Bullish on Palantir
Despite the downgrade, positive sentiment surrounding Palantir persists among some analysts. Earlier this month, Wedbush analysts raised their 12-month price target on PLTR from $30 to $35, suggesting a potential upside of more than 40% from the latest closing price.
Wedbush analysts referred to Palantir as the “Messi of AI,” suggesting it is gaining momentum with its AI integration platform (AIP).
Wedbush’s field checks on Palantir revealed optimistic sentiments, as more U.S. enterprises view the AIP foundation as a “launching pad of AI use cases.” The firm emphasized the significant cross-sell opportunities created by AIP across various industries, projecting Palantir to capture a meaningful share of the estimated $1 trillion AI Global TAM (Total Addressable Market).
However, it’s crucial to acknowledge that Wedbush’s bullish stance contrasts with the broader market sentiment. Data from the past 12 months indicates an average price target on PLTR of $19.29, suggesting a downside of over 21% from current levels.
Palantir (NYSE: PLTR) Stock Movement
PLTR stock plummeted 6.12% to close at $23.01 on Thursday. The traders had exchanged hands with 70,008,168 (70.00 million) shares compared to the average daily trading volume of 71.31 million.
Edward Cooke is a financial analyst, freelance writer, and editor. He has six years of experience in financial journalism. He has an in-depth understanding of equities markets, tracking major indices and providing real-time analysis on stock price movements, corporate earnings, and market sentiment.
