Wall Street investment bank Robert W. Baird has initiated coverage of Palantir Technologies (PLTR) stock with a neutral rating, citing its more than 300% gain this year as reason for caution.
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Palantir’s stock is the top performer in the S&P 500 index this year, surpassing gains in other high-flying securities such as Nvidia (NVDA) and Vistra Corp. (VST). Palantir, which specializes in data analytics, has seen significant growth in artificial intelligence (AI), supercharging its share price as a result.
Initiating coverage of PLTR stock, Baird analysts William Power and Yanni Samoilis wrote: “We are positive on the company’s position, but are wary of chasing given strong year-to-date performance and valuation.” Baird placed an initial price target on PLTR stock of $70, which is 5% lower than where the shares currently trade.
Risks and Rewards
The two analysts noted Palantir’s success in deploying generative AI, calling the technology critical for future value creation. They also highlighted Palantir’s ongoing contract wins, with significant potential for further market penetration in coming quarters.
However, Baird also noted some potential risks facing PLTR stock. These include a high valuation premium and concentrated revenue base, with the company’s top three customers accounting for nearly 20% of its revenue. A potential shift in government contracts under the new administration of president-elect Donald Trump was also noted as a potential issue.
Palantir shares are currently trading at just under $74, having gained 107% in the last three months.
Is PLTR Stock a Buy?
Palantir stock has a consensus Moderate Sell rating among 15 Wall Street analysts. That rating is based on two Buy, seven Hold, and six Sell recommendations issued in the last three months. The average PLTR price target of $38.73 implies 47.43% downside risk from current levels.
