Palantir stock (NASDAQ: PLTR) was one of the biggest winners in the S&P 500 last year. However, with the index entering a downward trajectory since February 20, the highly valued data analytics company has taken quite the beating as of late.
PLTR shares reached an all-time high (ATH) of $124.62 in mid-February, before pulling back to just $76.38 on March 10. After that, the announcement of several new customers, as well as positive developments surrounding defense contracts, caused a surge to levels as high as $97 on March 25.
However, by press time on March 28, Palantir stock was trading at a price of $89.35, having lost 6.04% in value over the past week falling below the $90 support level after retracing since Tuesday’s weekly high.
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On a year-to-date (YTD) basis, the stock is still up 18.14%. Crossing the psychologically important $100 threshold in April would go a long way in restoring confidence in what is a particularly risky yet promising equity. How realistic is that scenario?
Will Palantir hit $100?
Valuation is a perennial concern when it comes to one of the dominant artificial intelligence businesses of today. In the simplest of terms, a lot of growth is already priced in — even with the recent dips accounted for.
At a forward price-to-earnings (PE) ratio of 191.68, PLTR shares are significantly overvalued, even compared to rivals and peers in the software sector, which is generally characterized by high valuations.
Wall Street’s coverage tends to reflect this fact. Per data retrieved by Finbold from TipRanks, PLTR stock is a consensus ‘Hold’ according to the 18 analysts who track it and issue ratings for it. What’s more, with an average 12-month price forecast of $92.13, equity researchers see a modest 2.26% upside for the data analytics company.
Most recently, Goldman Sachs researcher Gabriela Borges reiterated a ‘Neutral’ rating for Palantir stock, and doubled down on a previously set $80 price target, which implies a 10.46% downside.
With plenty of uncertainty in the financial markets, waning optimism from analysts, and proposed cuts to the Pentagon’s budget, it’s clear why the business, which sources a significant portion of its revenue from defense contracts, seems unlikely to reach a price of $100 per share in April — or any time soon, for that matter.
Some researchers and technical analysts present dissenting views regarding PLTR shares
On the other hand, Wall Street could very well be wrong regarding the near-term price action of Palantir stock. The company has engaged in serious efforts to diversify revenue streams, and revealed a slew of high-profile customers at its Artificial Intelligence Platform Conference (AIPon) in mid-March.
In addition, notable chart pattern expert TradingShot recently highlighted a channel up pattern in a March 27 TradingView post. At present, PLTR shares are trading only slightly above their 100-day moving average (MA) on the 1-day timeframe. Historically, this has represented rather low-risk levels for going long.
If price action mirrors past movements in the channel up pattern, the next bullish leg should provide a roughly 138% gain, which would bring prices close to $200.
With that being said, price action doesn’t happen in a vacuum — macro conditions are currently unfavorable, and the stock’s short volume ratio has been quite elevated for weeks — ultimately making it unlikely that PLTR will breach the $100 mark in April.
Featured image via Shutterstock
