Palantir initiated with Underweight rating at Morgan Stanley on negative risk-reward
Jan. 06, 2025 8:31 AM ET
By: Chris Ciaccia, SA News Editor
 Michael Vi
Palantir (NASDAQ: PLTR) was given an Underweight rating at Morgan Stanley on Monday, as the firm sees a negative risk-reward at current levels.
Shares fell 1.2% in premarket trading.
"Palantir's commercial traction and [Artificial Intelligence Platform] product cycle drove the multiple re-rating, while the government segment and opex discipline drove upside to estimates," Morgan Stanley analyst Sanjit Singh wrote in a note to clients. "While acknowledging strong execution and momentum, we see success more than priced in at the current multiple premium."
Singh also put a $60 price target on Palantir shares.
Over the past 18 months, Palantir has been able to boost traction in the U.S. commercial business, at the same time it has seen deal momentum in the U.S. government and been disciplined with costs, Singh acknowledged.
However, with the stock up more than 340% in 2024, investors are already well aware of the strong performance.
"While giving Palantir credit, reflected in our above-cons [estimates] and 3.4x EV/CY26 FCF/Growth multiple (highest of the peers), we fail to see upside to our $60 PT," Singh added.
Despite the Underweight rating, Singh acknowledged that there could be additional positive catalysts, including the incoming Trump administration, citing the ties between Palantir co-founder Peter Thiel and Vice President-elect J.D. Vance; continued momentum in U.S. government contracts; and the inclusion in the Nasdaq 100 index may drive further inflows. |
