Palantir’s shares have surged 393% over the past year, driven by its AI platform offering and hype surrounding its growth. However, analyst Brent Thill at Jefferies warns that the company’s valuation is out of whack, citing a challenging Q4 setup with easier comparisons and growing competition.
Thill notes that Palantir’s enterprise value-to-next-12-months revenue multiple has compressed by 5% this year, dropping from 52x to 50x. This compression is similar to the Covid bubble in 2020, when high-growth companies like Snowflake and CrowdStrike saw their valuations surge.
Despite Thill’s bullish view on fundamentals, he rates PLTR shares an Underperform (i.e., Sell) due to the valuation concerns. To achieve just a 20% share price increase, Palantir would need to trade at a 16x multiple. Even if it manages to accelerate its growth to 50% annually, it would still require a 13.5x EV/revenue multiple in 2028.
Thill’s analysis is part of a broader consensus among analysts, with 5 bear camps and an additional 9 Holds and 2 Buys. However, the average price target implies shares will retreat by ~38% in the months ahead.
Investors should be cautious when considering Palantir’s stock due to its high valuation concerns. A more attractive valuation can be found through TipRanks’ Best Stocks to Buy tool. As always, it is essential to do your own analysis before making any investment decisions.
Source: https://www.tipranks.com/news/not-worth-the-gamble-ahead-of-earnings-says-jefferies-about-palantir-stock