Big data analytics company Palantir Technologies (NASDAQ:PLTR) attracted three unanimous “Sell” ratings from Wall Street analysts on November 21. England’s National Health System (NHS) gave details of the much-awaited contract of its new Federated Data Platform that disappointed analysts. Under the seven-year contract, Palantir and four other IT professional services and consultant firms were awarded lower-than-expected revenue of GBP 330 million. Following this, Deutsche Bank analyst Brad Zelnick, RBC Capital analyst Rishi Jaluria, and William Blair analyst Louie DiPalma reiterated their Sell ratings on PLTR stock.
Analysts Disappointed by the NHS Contract
Wall Street was highly optimistic about the NHS contract adding a new revenue stream for Palantir. The initial buzz surrounding the contract had suggested that Palantir would be the sole contract winner, with the value pegged at approximately GBP 480 million. However, the final contract details were not as expected. PLTR stock fell 3.8% following the news.
William Blair’s DiPalma fears that Palantir will be unable to meet its 2024 consensus estimate, as the contract size has been reduced. Plus, the analyst believes that there is potential for litigation and delay of the contract as the British Medical Association and numerous privacy groups have raised opposition to Palantir’s involvement. DiPalma reiterated his Sell rating on PLTR without giving a price target to the stock.
Similarly, RBC Capital’s Jaluria called the contract “underwhelming” and set a price target of $5, implying 74.6% downside potential from current levels.
Additionally, Deutsche Bank’s Zelnick said the contract details fell “a bit short” of expectations. Even so, the analyst believes the contract adds a new business line and expands Palantir’s government work beyond just defense and intelligence. Zelnick has a price target of $11 (44.1% downside) on PLTR.
What is the Prediction for PLTR Stock?
PLTR stock has exploded 208.1% so far in 2023, thanks to the artificial intelligence (AI) frenzy. Yet, Wall Street remains cautious about the stock’s trajectory going forward. On TipRanks, PLTR has a Hold consensus rating based on four Buys, five Holds, and six Sell ratings. The average Palantir Technologies stock prediction of $14.67 implies 25.5% downside potential from current levels.
Ending Thoughts
After gaining solid momentum this year, it remains to be seen if Palantir can live up to expectations. The NHS contract has disappointed investors, but Palantir’s management remains optimistic about its future growth. The company exceeded third-quarter Fiscal 2023 estimates and guided for solid Fiscal 2023 performance. Moreover, management believes the stock is now eligible for the S&P 500 (SPX) inclusion, which could add more upside to the stock.
