Perhaps the weight of great expectations is finally catching up with Palantir Technologies (NASDAQ:PLTR). How else to explain the company’s drooping share price following yet another record-breaking quarter, with phenomenal 63% year-over-year revenue growth?
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Palantir has fallen by some 16% since its early November earnings report, demonstrating that even this incredible performance might not be enough to push the share price higher. It’s not just Palantir’s high valuation, which most bulls are quick to acknowledge, as falling sentiment throughout the market has also taken a toll.
Indeed, worries about an AI bubble gained steam earlier this month with the release of a 13F filing from Big Short investor Michael Burry’s hedge fund, which disclosed positions against industry leader Nvidia and Palantir.
“Sometimes we see bubbles,” Burry posted on social media just a few days earlier. Should investors heed his warnings and run for the hills?
Not according to top investor Rick Munarriz, who believes that the recent pullback could serve as a very unique opportunity to jump on board.
“Palantir isn’t going to come to you. It doesn’t work that way,” explains the 5-star investor, who is among the top 4% of stock pros covered by TipRanks.
Munarriz notes that those who keep waiting for PLTR to fall back down to earth prior to investing may be holding their breath for quite a while. In fact, he thinks that the most recent pullback could turn out to “be as good as it gets.”
The investor points out that Palantir is going gangbusters across the board. While its U.S. government revenue increased by a “respectable” 52%, it produced a 121% gain in U.S. commercial sales – “the real juice here” – and the wins are likely to keep on coming.
“Can it get better? Sure. Palantir keeps inking beefy contracts with new and existing customers gaining an edge in business intelligence,” adds Munarriz.
The investor cites the $3.63 billion U.S. commercial backlog, which is up 199% year-over-year and 30% quarter-over-quarter. He does acknowledge, however, that PLTR remains expensive even after the post-earnings slide, trading at a triple-digit Price-to-Sales multiple.
Needless to say, Munarriz doesn’t believe that should deter would-be investors.
“That’s going to feel rich for many investors, but they also balked at the valuation when the multiples were lower for a Palantir that was growing more slowly,” sums up Munarriz. (To watch Rick Munarriz’s track record, click here)
Wall Street is slightly less bullish, to say the least. With 11 Holds outweighing 3 Buys and 2 Sells, PLTR carries a consensus Hold (i.e., Neutral) rating. Its 12-month average price target of $187.87 implies an upside of ~8%. (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.