The booming AI revolution is raising expectations through the roof for companies directly engaged in building and expanding the industry.
Palantir (NYSE:PLTR) stands as a notable player in this realm, with key partnerships across government and industry, including the U.S. army and Oracle.
However, despite impressive 1Q:24 performance marked by record-breaking profits, the company’s failure to meet its revenue guidance for the year caused a 15% drop in share prices.
Is this downturn a buying opportunity? Not so fast, suggests Danil Sereda, a 5-star investor ranked in the top 4% of TipRanks’ stock experts. “Even on bullish assumptions, PLTR appears to be a highly overvalued stock,” Sereda opined.
However, Sereda remains optimistic about Palantir’s future prospects. With geopolitical winds indicating increased defense spending in the AI sector, “Palantir appears to be a worthy market leader in this industry, with a product range that is hard to beat.”
In addition, corporate clients are beckoning. “Expanded partnerships with tech giants such as Oracle should enable Palantir to maintain its growth rates in commercial segments,” writes Sereda.
The investor is also optimistic about the company’s boot camp approach with potential customers. Calling these programs the company’s “pearl when it comes to revenue expansion,” the boot camps have already demonstrated success in securing paying clients.
And yet, Sereda is uncomfortable with PLTR’s current valuation. “The market seems to be pricing the stock very expensively for the next few years to come,” says the investor. “I believe any earnings miss in the foreseeable future or slightly negative news can lead to meaningful losses for current buyers.”
To this end, Sereda rates PLTR shares as a Hold (i.e. Buy). (To watch Sereda’s track record, click here)
Wall Street analysts seem to agree with Sereda. PLTR stock currently has a Hold consensus rating, based on 7 Holds, 2 Buys, and 3 Sell recommendations. Furthermore, the analysts expect shares to remain range-bound for the foreseeable future as indicated by the $22.11 average price target. (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.
