By The ongoing debate regarding Palantir Technologies Inc. shares PLTR, +0.99% continues into the new year. Despite being the top performer in 2023 among the stocks tracked by analyst Brent Thill, there is a significant bearish sentiment on Wall Street towards Palantir.
Thill, a Jefferies analyst, is now part of the group expressing doubts about the stock’s ability to maintain its momentum. Consequently, he has downgraded the stock from hold to underperform.
While Thill acknowledges the company’s long-term advantage in AI technology, he remains concerned about the stock’s valuation levels and lack of a monetization strategy. According to him, the recent surge in stock price is primarily fueled by AI excitement and retail trading momentum.
Thill also expresses skepticism about how Palantir’s AI Platform, commonly known as AIP, will significantly impact the company’s financials in the near term. Therefore, he believes that Palantir must explore alternative methods to accelerate commercial growth.
Palantir Faces challenges amid slowdown in commercial and government businesses
Industry analyst, Thill, admitted to underestimating the severity of the recent slowdown in both Palantir’s commercial and government sectors. He expresses concern that the prolonged recovery period will continue to impact the company’s growth rates throughout 2024.
Thill highlights the additional pressure on Palantir’s commercial business segment to drive overall growth, given the deceleration in the government sector and the absence of an update on the recovery timeline. This situation raises risks considering that Palantir has yet to produce sufficient positive data points to validate its execution in its commercial go-to-market strategy.
The forecasting of trends in this context becomes increasingly challenging, particularly when it comes to assessing the situation within the government sector.
Thill’s downgrade has led to a shift in sentiment among analysts. Of the 19 analysts covering Palantir’s stock, eight adopt a bearish stance, while five maintain bullish ratings, and six remain neutral. Consequently, Thill has readjusted his price target from $18 to $13, representing a 20% decline from Thursday’s closing level.
Palantir’s shares have experienced a decline of more than 4% during Thursday’s premarket trading session.
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