‘Sell and don’t look back,’ says top analyst on Palantir shares

Some stocks are sure to generate a lot of discussion. Palantir (NYSE:PLTR) is one such name, with analysts regularly presenting divergent opinions about the big data specialist, resulting in no clear consensus on the company’s future direction.

However, the investor view is more ambiguous and in a positive way. It is easy to see that, as the stock has risen by more than 68% since the turn of the year.

But that sums up the problem, says Mizuho’s Gregg Moskowitz, a 5-star analyst ranked in the top 4% of Wall Street stock experts who finds the stock’s valuation “hard to justify.”

“The shares now trade on a CY24 and CY25 EV/Sales multiple of 25-26x and 21x, which we believe now reflects an outsized 160% premium to our enterprise software peer group median for next year,” Moskowitz further explained. “Moreover, PLTR’s current NTM EV/Sales multiple is at peak levels measured over the past 2-3 years. We are finding it increasingly difficult to justify PLTR’s elevated multiple, which we believe likely already discounts significant acceleration.”

Moskowitz admits that the company has “generally performed well” in recent quarters. That said, the analyst thinks the 3% win in the first quarter was “a lot less impressive than it appeared at first glance,” with Moskowitz noting that some of Palantir’s wins were “lower quality.”

The PLTR story certainly has some “exciting aspects” – such as megadeals and the AIP (artificial intelligence platform) – although these are offset by a “lack of transparency and the likelihood of uneven outcomes in the future.”

Moskowitz therefore has doubts about the company’s ability to deliver consistently strong results and accelerated growth, both of which are necessary to “justify the premium valuation.”

In short, Moskowitz lowered his PLTR rating from Neutral to Underperform (i.e. Sell). His $22 price target implies a downside of ~24% from current levels. (Click here to watch Moskowitz’s track record)

Among Moskowitz’s peers, 5 others join him in the bear camp, 3 remain positive, while 5 remain on the sidelines with Hold ratings, all converging to a Hold consensus view. The average price target of $22.42 is only slightly above Moskowitz’s target and is projecting a 22% downside over 12 months. (See Palantir Stock Forecast)

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Disclaimer: The opinions expressed in this article are solely those of the named analyst. The content is for informational purposes only. It is very important to do your own analysis before making any investment.