Despite Palantir's (NYSE: PLTR) strong Q3 2024 financial results and the positive momentum surrounding AI and the incoming Trump administration, Jefferies maintains a cautious outlook, highlighting concerns about the stock's valuation and significant insider selling.
Palantir exceeded expectations with $725 million in revenue for Q3, representing a 30% year-over-year growth. This aligns with the company's projected growth target through 2025. However, Jefferies analyst Brent Thill expresses concerns about the stock's rapid price appreciation:
"PLTR is trading at an unsustainable multiple, and insider selling is backing that up. PLTR is up 257% YTD on multiple expansion."
Thill points out Palantir's high valuation relative to other software companies:
"PLTR trades at 43x CY25 revenue, well over 2x the next highest software name."
He also notes a shift in ownership from retail to institutional investors following Palantir's inclusion in the S&P 500, suggesting a potential decrease in the "retail premium" that has boosted the stock price.
The most significant concern raised by Thill is the substantial insider selling, particularly by the CEO:
"We note insider selling on 10b5-1 plans has rapidly picked up with the CEO selling nearly $2B in stock over last 3 months & >$1B over last 2 weeks."
With a price target of $28 per share, significantly below the current trading price of around $61, Jefferies maintains its 'Underperform' rating on Palantir, citing an "unsustainable premium."
This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
