Data analytics company Palantir Technologies (NYSE: PLTR) dipped in trading on Thursday after top-rated Morgan Stanley analyst Keith Weiss downgraded the stock to a Sell. Still, he raised his price target to $9 from $8, which implies 40.1% downside risk from current levels.
Weiss highlighted concerns surrounding the company’s near-term prospects and valuation dynamics. According to the analyst, although Palantir has garnered significant enthusiasm for its AI product cycle, the monetization of its Artificial Intelligence Platform (AIP) remains elusive. Weiss added that delays in AIP revenue contribution, coupled with uncertainties on how to effectively monetize it, give the stock an unfavorable risk-reward profile.
The analyst added that the company’s government segment, which was once seen as having a lot of potential, has also begun to show signs of deterioration, leading to more apprehensions. Weiss is of the opinion that Palantir needs to examine the road ahead, as its revenue outlook implies a second-half acceleration, setting a challenging bar for positive estimate revisions.
Analysts remain cautious about PLTR stock with a Hold consensus rating based on three Buys, five Holds, and Sells each.
