Analysts have started to hail big data firm Palantir’s (PLTR) inclusion in President Donald Trump’s Golden Dome anti-missile shield project. However, Benchmark analyst Yi Fu Lee has urged caution on the stock, noting that the company’s current valuation seems to indicate that investors are pricing in perfection over the next few years.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
Why Benchmark Is Neutral on Palantir Stock
This suggests that the analyst believes that PLTR shares may be getting too expensive because investors are expecting strong execution over the next few years with no major missteps, such as a growth slowdown. As a result, Lee kicked off coverage of Palantir with a Hold rating and did not assign a price target.
The Benchmark analyst’s rating comes as Palantir’s shares have dropped by roughly 18% since the start of the year, but they are up about 73% over the last 12 months.
However, despite making the neutral call on the stock, Lee acknowledged that Palantir is respected for its AI-powered automation platform that helps government and commercial customers alike with real-time decision-making. The analyst added that the company’s positioning is backed by its solid financial base and CEO Alex Karp‘s leadership.
Analyst Flags Gains from Golden Dome Project
Last week, reports emerged that Palantir, alongside defense tech company Anduril, is part of a consortium developing software for the U.S. government’s $185 billion Golden Dome project. Rosenblatt Securities analyst John McPeake has noted Palantir could generate several billion dollars from the first phase of the project.
McPeake argued that earlier defense initiatives such as Aegis BMD, IBCS, Space C2, and JADC2 typically directed about 20% to 20% of their overall funding to software. This came with total annual spending of between $3 billion and $8 billion.
Is PLTR a Strong Buy?
Across Wall Street, analysts continue to approach Palantir’s shares with caution and currently have a Moderate Buy consensus rating on the stock. This is based on 14 Buys, five Holds, and two Sells assigned by 21 analysts over the past three months.
However, the average PLTR price target of $194.61 implies about 33% upside from current trading levels.
