Palantir has this rare distinction as Morgan Stanley says stock price is too high
By Steve Goldstein
Morgan Stanley assigned a new analyst to cover hot artificial intelligence stock Palantir Technologies, and the Wall Street firm joined the ranks forecasting worse times ahead for the stock.
Sanjit Singh assumed lead coverage of Palantir (PLTR) and slapped an underweight rating and $60 price target on the company. The firm previously had an underweight rating until November, when it removed its rating for the company to re-evaluate the company.
None of the analysts who follow the company, according to FactSet, have a target price above Friday's close of $79.89. The closest is Dan Ives of Wedbush Securities with a $75 target; the lowest is $11, courtesy of RBC Capital Markets' Rishi Jaluria.
Palantir stock, which jumped 6% on Friday, slid 5% on Monday.
Morgan Stanley's Singh acknowledges that the Alex Karp-led company has gotten a lot of things right, with its U.S. commercial business accelerating and its government business re-accelerating, all while the company maintained expense discipline.
"To put it bluntly, if executive management teams and decision makers want to get their AI initiative into live production environment rapidly, Palantir has emerged as one the select few partners to call," the analyst says.
Palantir also may get a boost from its links to the incoming Trump administration, notably from co-founder Peter Thiel, as well as more government work.
But there's a price for everything. Singh says Palantir's 340% gain in 2024 was driven almost entirely by multiple expansion, of 292%. Revenue estimates for 2025 have only increased by 10% over the course of the year. Backing things out, the stock is pricing in a 30% compound annual growth rate over 10 years, as well as 41% free cash flow margins, he says.
Singh says even his target leaves the stock as the most expensive of what it calls high-growth software companies, with an 80% premium to peers.
-Steve Goldstein
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