The buzz around Palantir (NASDAQ:PLTR) has been growing by leaps and bounds over the past year, and it is easy to understand why. The big data analytics company has demonstrated its ability to deliver value for organizations in a wide variety of industries, increasing revenues, profits, and clientele along the way.
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Not surprisingly, company shares have skyrocketed into the stratosphere. Despite a recent pullback due to a potential cut in U.S. defense spending and news that CEO Alex Karp is planning to offload a large chunk of shares by mid-September, shares are up 330% for the past twelve months.
Still, even though the company appears to be firing on all cylinders, investor Marc Gerstein thinks some of the bullish sentiment — at least when it comes to the stock price — is beginning to soften.
“Companies and their stocks aren’t one and the same,” explains the investor. “We need separate opinions for each.”
That is not to say that the investor is down on the company — far from it. Gerstein believes that Palantir has demonstrated its ability to save customers both time and money, and this trend will only continue in the years ahead.
“PLTR’s end-user AI applications are seriously valuable and productive to its clients. It takes on big, important tasks, and executes them quickly and effectively,” notes the investor, who adds that there is a vast array of opportunities for PLTR to sell its wares to additional firms.
Gerstein is also unmoved by the potential decreases in defense spending. For one, PLTR commercial revenues are rapidly expanding. In addition, these cuts will be aimed at “excessive bureaucracy” – as well as climate and DEI initiatives. Gerstein notes that none of these areas would seem to impact PLTR’s work with the security establishment.
And yet, as Gerstein explains, the company’s prospects are not always a mirror image of the stock’s behavior. The view that Palantir’s valuation is overheated is growing more common, the investor notes, and this sentiment will likely increase going forward.
“I now believe PLTR will be an average, rather than above-average performer,” says Gerstein about the stock. That being said, the investor is not ready to turn bearish on Palantir, as the company’s “business strengths are sufficiently pronounced to attract more buyers if the stock falls too far.” The investor is therefore rating PLTR a Hold (i.e. Neutral). (To watch Gerstein’s track record, click here)
This seems to mirror Wall Street’s views as well. With 3 Buy, 10 Hold, and 5 Sell ratings, PLTR holds a consensus Hold rating. Its 12-month average price target of $91.88 would yield losses in the high single digits over the coming year. (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.
