On Wednesday, Jefferies analyst Brent Thill reiterated a Sell rating on Palantir Technologies (PLTR) stock with a price target of $60 (46% downside potential), highlighting several concerns, including stagnant international growth and the potential stock sale by the CEO.
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Notably, PLTR stock declined 10% yesterday following a report by The Washington Post that the Pentagon is gearing up to reduce the U.S. defense budget by 8% annually over the next five years, which could adversely impact the data analytics company’s government revenue. Additionally, CEO Alex Karp adopted a new stock trading plan that allows him to sell about 10 million shares of PLTR stock by September 12, 2025.
Despite yesterday’s decline, PLTR stock has rallied over 358% over the past year, reflecting investors’ optimism about the company’s strong financials and AI (artificial intelligence) tailwinds.
Jefferies Reiterates Sell Rating on PLTR Stock
Thill listed several reasons for his bearish stance on Palantir stock based on the key takeaways from the company’s 2024 10-K filed with the Securities and Exchange Commission (SEC) on February 18, 2025. Let’s look at these concerns:
- Lackluster International Growth: Thill pointed out that PLTR’s U.S. revenue growth is overshadowing the subdued international growth. Specifically, the company’s U.S. revenue accelerated to 38% in 2024 compared to 32% in 2023 and accounted for 66% of the overall revenue last year. In comparison, International revenue increased 14% in 2024 as well as in 2023.
- Concerns over Modest Headcount Growth: The five-star analyst expressed concerns that Palantir’s total headcount grew by just 5% or 201 employees in 2024, despite the tremendous growth in its business. Overall, the company’s workforce has increased by only 98 employees over the last 2 years, considering the decline in headcount in 2023. Thill contends that this subdued growth could imply one of the three aspects: AI opportunity is not as big as what is priced into PLTR stock, hiring in engineering and technical areas is being offset by layoffs elsewhere (for example, international headcount declined in 2024), and over-hiring in 2022.
- Potential Stock Sale Following Update to Rule 10b5-1 Trading Plans: As mentioned previously, following the adoption of a Rule 10b5-1 trading arrangement, CEO Karp can sell about 10 million shares by September 12, 2025. Similarly, president and director Stephen Cohen also adopted a Rule 10b5-1 trading arrangement, allowing him to sell 4.06 million shares of PLTR stock by September 12. Such significant stock sales could reflect negatively on the company.
- Departure of Chief Accounting Officer: Thill noted that Heather Planishek, PLTR’s chief accounting officer, announced her decision to step down from her position effective February 24, 2025. She will continue as an advisor to ensure a smooth transition. David Glazer, PLTR’s CFO and treasurer, will assume the role of interim principal accounting officer, effective February 25. The exit of a key executive could indicate instability.
It is worth noting that Thill ranks 498 out of more than 9,300 analysts tracked by TipRanks. He has a success rate of 59%, with an average return per rating of 9.6% over a one-year timeframe.
Is PLTR a Good Stock to Buy?
Despite AI tailwinds, several analysts have raised concerns about Palantir stock’s lofty valuation. Overall, Wall Street is sidelined on PLTR stock, with a Hold consensus rating based on three Buys, 10 Holds, and five Sell recommendations. The average PLTR stock price target of $91.88 implies 18% downside risk from current levels.
