Palantir stock (NASDAQ: PLTR) was one of the best performers of 2024. After a short pullback in the first half of January, PLTR shares went on another strong rally, ultimately reaching an all-time high (ATH) price of $124.62 on February 18.
Since then, market sentiment has shifted significantly, and Palantir stock crashed below $100. The major concerns surrounding the data analytics company — an extremely high valuation and a significant degree of reliance on government contracts, have taken center stage.
With a looming trade war on the horizon, a risk asset selloff was enacted, while proposed cuts to the Pentagon’s budget left investors worried as to whether or not Palantir’s revenue growth could be sustained.
Picks for you
By press time on March 5, PLTR stock was trading at a price of $86.94 — some 30.23% off of its ATH. Despite recent losses, Palantir shares are still up 14.96% on a year-to-date (YTD) basis.
Even a pullback of this magnitude, however, was not enough to sway one bearish Wall Street analyst.
Jefferies reiterates valuation concerns regarding Palantir stock
On March 5, Jefferies equity researcher Brent Thill doubled down on a previously set ‘Underperform rating’ for Palantir stock. The analyst set a $60 price target, which implies a 30.98% downside from current prices.
In a note shared with investors, Thill highlighted several crucial factors that drove his decision. The researcher first drew attention to the frequent instances of insider selling, particularly by chief executive officer (CEO) Alex Karp, who dumped approximately $45 million worth of PLTR shares in the past six months — a figure that amounts to roughly 21% of his stake.
Thill noted that, even as the stock’s valuation has experienced a significant compression, it still remains quite highly-valued, even in comparison to peers and rivals. To be more precise, the ATH of Palantir stock equated to 61 times CY 2026 revenue. At present, that figure is closer to a 39 times multiple — which is still twice as high as the next-highest software company multiple.
Finally, the analyst commented that: ‘Given how other big multiple stories have traded post-peak, we think there is more multiple contraction to come’.
With that said, most Wall Street analysts have not made revisions to their price forecasts following recent developments. William Blair is the sole exception — having upgraded Palantir stock from ‘Underperform’ to ‘Market Perform’ on March 5. Although the firm expects PLTR shares to be range bound for the remainder of the year, it also expects to see the ATH reclaimed once the market turns bullish.
Featured image via Shutterstock
