Palantir Technologies Inc (PLTR)

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Analyst downgrades Palantir stock to Underperform, sets a new Street-low PT
By: Investing.com | December 21, 2022

Wolfe Research analysts downgraded Palantir (NYSE:PLTR) to Underperform from Peer Perform as they continue to see more downside in the stock.

They also lowered the Palantir price target to a new Street-low of $4.50 per share, signaling a downside potential of nearly 30%. The analysts wrote in a note that their new price target also represents a "40% downside to shares as of 12/15/2022."

"We have watched PLTR decelerate its top line by 30 points while operating margins have contracted from the mid-30% range to the midteens over the past few years with FCF on the same trajectory. The lumpiness and unpredictability of both existing Government contracts as well as potential awards make it difficult to model and have confidence in the business," Zukin wrote in a client note.

The analysts add that Wolfe's checks showed that the "general go to market motion is sub-par." Zukin also expects revenue to decelerate further while the margin degradation should continue as Palantir continues to invest.

"We do not believe a decelerating "Rule of 20" and/or a Featherweight Growth company deserves a premium multiple at 8.2x/7.5x CY23/24 EV/Revenue. As such, we are downgrading shares of PLTR to Underperform," the analysts added.

Net-net, Zukin sits below Street expectations and sees "the opportunity to make money on the short side."

Palantir stock is down 65% year-to-date (YTD).

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