Palantir (NYSE:PLTR) stock fell 3.4% in early Friday trade after Jefferies analysts downgraded the rating to Underperform (equivalent to sell).
The new price target of $13 suggests a 20% downside risk based on yesterday’s closing price.
While analysts acknowledge that Palantir “is a unique data asset with a particularly wide technology moat and a data platform that can address complex mission-critical use cases that no other vendor can,” they believe the stock rallied too much, too fast.
“We are concerned that the stock has rallied to unsustainable valuation levels primarily on the back of AI euphoria (and retail trading momentum) with no monetization strategy,” analysts said in a note.
Despite these comments, analysts see Palantir as a company with an AI technology advantage in the long term, which practically makes today’s move a valuation call.
“We are still fundamental fans and believe that the company has potential to gain share in an underpenetrated and large TAM but believe that there is more risk than reward at current levels, even when factoring in upward estimate revisions,” analysts concluded.
Analysts added that PLTR’s revenue multiple stands “well above 2-year average.”