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Palantir Technologies Inc. has a strong position in artificial intelligence, but finding a catalyst for its high-flying shares has become “more challenging,” according to an analyst.
Raymond James’ Brian Gesuale downgraded Palantir’s stock
PLTR,
to outperform from strong buy Tuesday, citing the “recent run in shares coupled with a premium valuation.” The stock has risen 39% over the past month, and it’s ahead 154% on a year-to-date basis.
Closing above $16 Friday, Palantir’s stock “now reflects a material element of our near term bullishness,” wrote Gesuale, who remained upbeat about the company’s ability to capitalize on the rush of interest around AI and lifted his price target on the stock to $18 from $15 Tuesday. Palantir could see 40 customer additions for its AI platform (AIP) this year, followed by at least 90 in each of the next two years, by his math.
See also: Palantir’s stock rises as BofA cheers company’s ‘unique position’ in AI
He expected the company could see $2.81 billion in total revenue for 2024, slightly above his prior projection of $2.80 billion, which was already the highest estimate listed on FactSet.
“Fundamentals should trough in 2023 and pre-AI bear concerns focused on 4Q sales ramp and prior results getting help from non-recurring sources such as Japan and SPAC sales should dissipate as the story shifts to AI opportunity,” Gesuale added.
Elsewhere, William Blair analyst Louie DiPalma reiterated his cautious view of the stock in a Friday note to clients.
“While Palantir shares may continue to trend higher in the near term in parallel with C3.ai…downside risk has significantly increased,” he wrote. “Investors may grow frustrated if Palantir’s revenue growth remains in the teens after the recent run-up.”
DiPalma rated Palantir’s stock at underperform.
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