Shares of data analytics company Palantir Technologies (NYSE:PLTR) have declined 24% over the last month. However, the stock is still up more than 136% year-to-date, thanks to the company’s solid third-quarter guidance and optimism about its artificial intelligence (AI) capabilities, especially the new artificial intelligence platform (AIP). While the consensus rating indicates that Wall Street is sidelined on PLTR, Bank of America analyst Mariana Perez Mora remains bullish on the stock and sees further upside.
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Bank of America Analyst Remains Bullish on PLTR Stock
Last week, Mora reiterated a Buy rating on Palantir stock with a price target of $18. Mora thinks that the sell-off in the stock in August was due to a recent pullback in the AI market sentiment. Nevertheless, the analyst continues to believe that Palantir is a key player in the generative AI market.
Mora contends that the company’s ability to provide generative AI solutions that are compliant with stringent security requirements, with demonstrated applications across sectors, has not been fully appreciated by the market. The analyst noted that Palantir is in a unique position due to its ability to implement secure and compliant generative AI for both commercial and government clients.
Interestingly, Mora sees two near-term catalysts that could drive the stock higher. The analyst highlighted the five-year £360 million U.K. National Health Service (NHS) data procurement contract, expected to be awarded by September 28th, as the first catalyst. Secondly, the analyst noted that the company would become eligible to be an S&P 500 (SPX) member if it reports another profitable quarter (Q3 2023) on a GAAP basis. Mora believes that becoming an S&P 500 member would reduce the stock’s volatility and attract more institutional investors.
Aside from Mora, famous investor Cathie Wood is also optimistic about Palantir. On Friday, Cathie Woods’s Ark Innovation ETF (NYSEARCA:ARKK), ARK Next Generation Internet ETF (NYSEARCA:ARKW), and ARK Fintech Innovation ETF (NYSEARCA:ARKF) bought 525,500, 89,000 and 58,000 PLTR shares, respectively, for an aggregate amount of over $10 million.
In contrast, Morgan Stanley analyst Keith Weiss downgraded Palantir stock to Sell from Hold last week, but increased the price target to $9 from $8. Weiss argued that the near-term optimism about the company’s AI product cycle and the stock’s elevated valuation create an unfavorable risk-reward profile, given that visibility to AIP monetization still remains low.
Is Palantir a Good Stock to Buy?
Overall, Wall Street is sidelined on PLTR stock with a Hold consensus rating based on three Buys, five Holds, and six Sells. The average price target of $13.32 implies a possible downside of 12.3% from current levels.
Conclusion
While Bank of America analyst is positive about Palantir’s AI capabilities driving further upside, several analysts are either sidelined or bearish on PLTR stock due to various reasons, including high valuation.
