Palantir (NYSE:PLTR) stock has seen a massive 240% growth this year, yet despite some expectations of a potential pullback, the company shows no signs of losing momentum.
In its most recent Q3 earnings report last week, PLTR once again surpassed both top- and bottom-line expectations. This is the eighth straight print in the black for the big data firm, which in the words of Palantir CEO Alex Karp, “absolutely eviscerated this quarter.”
Investors are not only impressed by Palantir’s recent results but are also optimistic about its future growth, with the company raising its Q4 and FY2024 revenue guidance above analysts’ projections.
However, top investor Victor Dergunov, known for his confidence in Palantir’s long-term potential, is taking a more cautious stance for now.
“If the stock pulls back in future weeks, I will consider increasing Palantir for the intermediate and long-term in the $40-35 range,” writes the 5-star investor, who’s ranked in the top 3% of TipRanks’ stock experts. “I would refrain from chasing the stock at around $50 here.”
While PLTR is an “excellent company,” the valuation has become a bit too “frothy” for Dergunov’s liking. The investor explains that shares are trading at an expensive forward P/E multiple of 100 and a P/S multiple of 34 times 2024 revenue estimates.
“Unless Palantir increases its sales much more rapidly than anticipated, its near-term upward stock price potential may be relatively limited, for now,” Dergunov adds. In other words, the investor believes that PLTR is currently “priced for perfection.”
Nevertheless, Dergunov remains optimistic about Palantir’s long-term potential, seeing continued growth opportunities as the company strengthens its presence in the AI sector.
“The intermediate and long-term potential remains. Palantir should continue expanding revenues and EPS, which could enable its stock to stay on an upward trajectory for the long term,” Dergunov added.
All in all, Dergunov believes Palantir has a bright future but urges caution at its present valuation, shifting his rating from Strong Buy to Buy. (To watch Dergunov’s track record, click here)
Dergunov is still more bullish than Wall Street. PLTR stock has a Hold consensus rating based on 4 Buys, 7 Holds, and 6 Sells. With a 12-month average price target of $34.30, analysts project a potential downside of 41%. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
