The rapid ascent of Palantir Technologies (NASDAQ:PLTR) to the top of the stock market zeitgeist shows no signs of slowing down. The AI data analytics company has been on a spree of turbocharged growth, and its share price is up some 450% for the past twelve months.
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The company has clearly struck gold with its enterprise AI platforms, and has succeeded in both attracting customers and upselling them. Palantir’s most recent earnings report was full of additional evidence that the company remains “dressed for success” – just last week PLTR hit a new record high.
One top investor known by the pseudonym The Value Portfolio has been onboard the PLTR express for years. That being said, the 5-star investor believes the enthusiasm has gone too far, and the time has come to say farewell to this AI winner.
“The company has great assets in a high-demand industry, but its valuation has already priced in a substantial portion of the upside,” explains the investor, who is among the top 2% of all TipRanks’ stock pros.
The Value Portfolio has a hard time looking beyond Palantir’s price-to-earnings multiple of more than 200x and its price-to-sales multiple north of 100x – valuations that the investor believes have already priced in years of impressive growth. Though The Value Porfolio predicts that Palantir will hit these levels, this does not exactly leave much room for gains.
“Palantir is a great company, there’s a reason why we made it our top tech pick of the 2020s. Despite that, any great investment is partially a great investment because of its current valuation,” adds The Value Portfolio.
And that’s just the rub, notes The Value Portfolio, who argues that it is important to understand when investments have outgrown their value. The investor is pretty certain that’s the case with PLTR.
“We now view the company as overvalued,” concludes The Value Portfolio. “We recommend that investors either hold or sell a portion of their investment, and wait for a potential downturn before investing again.”
No surprise here, The Value Portfolio is assigning PLTR a Sell rating. To watch The Value Portfolio’s track record, click here)
While not quite as bearish, there seems to be some weariness among Wall Street regarding Palantir as well. With 3 Buy, 10 Hold, and 4 Sell ratings, PLTR is a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $104.27 has a downside of some ~28%. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
