‘The Time Has Come,’ Says Investor About Palantir Stock

There is no question that Palantir (NASDAQ:PLTR) is a one-of-a-kind company, and the superlatives just keep on coming. Palantir continues to climb to new heights, and this week reached yet another all-time high.

Palantir’s incredible track record over the past year is well known by this juncture, as the company continues to deliver record revenues, strong margins, and a growing list of satisfied customers.

The company is particularly known for its defense- and security-related business, and global tensions have a tendency to boost its share price. All told, PLTR is up some 450% over the trailing 12 months.

Though assessing that “Palantir’s bull case is stronger than ever,” investor Kenio Fontes believes that the time has finally come to say farewell.

“Even with optimistic growth and margin assumptions, Palantir’s premium valuation is hard to justify,” explains the 5-star investor.

Of course, that’s not to say that the investor is down on Palantir’s growth prospects – far from it. Not only is the “AI war tech” thesis firmly intact, and growing commercial revenue gives the investor even more optimism. The problem is that these positive numbers are already priced into the share price.

And that’s just the rub, emphasizes Fontes, who notes that the company’s valuation is an “F.” In addition, the record-setting growth will eventually reach a natural limit.

“PLTR should not continue to trade at 200x forward earnings, but rather as a premium company with predictable free cash flow that has reached greater maturity, and therefore the multiple will reduce to something closer to the market average,” adds Fontes.

In the meantime, the investor believes that there are better options out there for those looking to take advantage of the AI trend, but in a more predictable and slightly less risky fashion. Summing up, Fontes urges investors to steer clear of this one for now.

“PLTR has currently become an avoidable stock, with no compelling reasons to have it,” concludes Fontes, who rates PLTR a Sell. (To watch Fontes’ track record, click here)

Wall Street is neither hot nor cold on Palantir, but rather somewhere in the lukewarm middle. With 10 Hold ratings – to go along with 3 Buys and 4 Sells – PLTR has a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $104.27 has a downside of ~25%. (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.