Palantir’s Valuation Under Scrutiny Amid Bullish Analyst Call

Palantir US69608A1088

The stock of data analytics firm Palantir has experienced significant volatility as the new trading year begins. A starkly optimistic assessment from Citigroup, which highlights substantial growth potential, is being weighed against persistent concerns over the company's lofty valuation and emerging legal challenges.

Market analysts present a conflicting picture of Palantir's investment case. In the most bullish move, Citigroup upgraded its rating from "Neutral" to "Buy." Analyst Tyler Radke also raised the firm's price target from $21 to $23.50, implying a potential 32% upside from recent levels. Radke cited an accelerating adoption of artificial intelligence tools within the commercial sector and significantly expanding defense budgets as core reasons for this increased optimism.

His growth projections are notably aggressive, suggesting that revenue could expand by 70% to 80% by 2026. The government segment alone is forecast to grow 51%, fueled by strategic contracts such as the "Golden Dome" missile defense initiative.

However, other financial institutions hold contrasting views. Bank of America maintains the highest price target on the Street at $25.50, pointing to Palantir's $44.8 million "ShipOS" contract with the U.S. Navy as a key driver. On the opposite end of the spectrum, Jefferies has issued a "Sell" recommendation with a price target of just $7.00.

Lofty Multiples Spark Concern

The primary criticism from bearish analysts centers on valuation. The stock currently trades at extreme multiples, including a trailing price-to-earnings (P/E) ratio of 397 and a price-to-sales ratio of 112. This rich valuation prompted prominent investor Cathie Wood of ARK Invest to recently divest approximately $1 million worth of Palantir shares.

Legal Dispute Adds Uncertainty

Further clouding the outlook is an escalating legal battle with AI startup Percepta. Palantir has accused Percepta's founders—former Palantir employees—of stealing trade secrets. This week, the defendants fired back, characterizing the lawsuit as a tactical move designed to cripple a rising competitor.

All eyes are now on the upcoming earnings report scheduled for February 2. For the quarterly results, analysts are anticipating revenue of $132 million and earnings per share of $0.23. Following a strong previous quarter, the pressure is on for Palantir to demonstrate that its operational growth can continue to support its premium market valuation.

@ boerse-global.de | US69608A1088 PALANTIR’S