Palantir (NYSE:PLTR) has been one of the biggest stock market stories of 2024, with its shares soaring over 250% this year alone.
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This meteoric rise highlights the company’s success in securing clients and driving revenue expansion. Palantir’s projected revenues for 2024 are anticipated to fall between $2.805 billion and $2.809 billion, reflecting a year-over-year growth of 26.2%.
It comes as no surprise that the company has added a slew of corporate and sovereign clients, which are driving much of this growth. American commercial customers are an especially strong segment for PLTR, accounting for over 80% of new private sector clients.
Adding to its momentum, Palantir was recently included in the Dow Jones Industrial Average (DJIA). Moreover, later this month, the company will transition its listing from the NYSE to NASDAQ. These developments are likely to bolster the stock further, as index-tracking funds for both the DJIA and potentially the NASDAQ-100 may soon be compelled to acquire Palantir shares.
Despite the streak of wins that seem to keep on coming, top investor Daniel Jones believes that PLTR’s valuation has gotten out of hand.
“Even if we assume continued rapid growth for the next few years, shares are trading at levels that, frankly, don’t make sense,” writes the 5-star investor, who sits in the top 2% of TipRanks’ stock pros.
Jones points out that even with aggressive annual growth of 40% over the next few years, by 2027, Palantir’s P/AOCF and EV/EBITDA multiples would still be high at 44.5 and 49, respectively.
“Those are multiples that I would consider to be at the high end of the fair value range,” writes Jones, adding that “as the business grows, it is likely that further meteoric growth will slow as well.”
In a stern caution to investors, Jones downgraded Palantir shares to a Sell, warning, “Beware the bottom falling out.” (To watch Jones’ track record, click here)
On Wall Street, Palantir claims a Hold (i.e. Neutral) consensus rating based on 3 Buy, 7 Hold, and 6 Sell recommendations. That being said, its 12-month average price target of $33.73 suggests a potential downside of ~45% from its current trading levels. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
