Jefferies analyst Brent Thill issued a bearish call on Palantir Technologies (PLTR, Financial) software company, downgraded to ‘Underperform' from ‘Hold.' Thill has maintained a $28 price target, which indicates a 60% downside from current levels. He also has highlighted issues with valuation and growth projections, which he published on November 7.
At this time, Palantir shares trade at 43 times their projected calendar 2025 revenue, 44% higher than the industry median. Thill compared this situation to the tech bubble during the COVID-19 virus infection, and such a rather high evaluation is becoming less frequent as macroeconomic factors become more stable. As the analyst noted, that is much higher than four times the closest peer, which can lead to more significant downside risks.
Thill noted that Palantir needs to maintain a 40% annual growth rate for the next four years to justify its current stock price and a 12 multiple of estimated 2028 revenues, a situation he does not expect. Although recognizing that the firm's basics are strong, he noted that such steep growth goals seem untenable.
Accompanying the bearish picture, insider selling has picked up recently, with CEO Alex Karp selling $398 million worth of stock on November 13. This development emphasizes Thill's cautioning view of the near-term outcome.
However, Thill's downgrade did not mean investors should lose faith in Palantir; instead, Thill said there was long-term value to be found at Palantir and could be seized at specific entry points. Addressing the topic of its current valuation, his analysis raises various questions about the company's stock future and paves the way for helicopter takeoff.
