Morgan Stanley has initiated an 'underweight' rating for Palantir Technologies (NASDAQ:PLTR), with a price target set at $60. This move comes as analyst Sanjit Singh takes over lead coverage of the company.
What Happened: The Wall Street firm had previously removed its rating in November to reassess the company. Currently, no analysts following Palantir have set a target price above its recent close of $79.89, according to FactSet data. The closest target is $75, set by Dan Ives of Wedbush Securities, while the lowest is $11, from Rishi Jaluria of RBC Capital Markets, MarketWatch reported on Monday.
Singh acknowledges that Palantir, led by Alex Karp, has shown strong performance in its U.S. commercial and government sectors while maintaining expense discipline. However, Singh notes that the company's 340% gain in 2024 was largely due to multiple expansion, with revenue estimates for 2025 only increasing by 10%.
Despite Palantir's potential boost from its connections to the incoming Trump administration and co-founder Peter Thiel, Singh argues that the stock remains highly priced, with an 80% premium compared to its high-growth software peers.
"To put it bluntly, if executive management teams and decision makers want to get their AI initiative into live production environment rapidly, Palantir has emerged as one the select few partners to call," Singh said.
Why It Matters: The recent rating by Morgan Stanley comes amid a backdrop of significant developments for Palantir. In December, Palantir's CEO Alex Karp embraced the company's "cult" status, as the stock soared nearly 350% year-to-date. This surge was fueled by strong investor sentiment and endorsements, such as billionaire Stanley Druckenmiller praising Karp's book, "The Technological Republic."
Furthermore, Jim Cramer recently expressed interest in Palantir, describing it as a "protective intellectual blanket" for his investing club portfolio. This interest highlights the company's appeal to investors seeking innovative and resilient stocks.
Price Action: Palantir stock was down by 1.59% at the time of writing during pre-market hours on Monday, as per Benzinga Pro. The stock has risen 379% in a year.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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