Shares of Palantir Technologies (PLTR) fell about 7% premarket on Tuesday despite third quarter results beating estimates and the company raising its full-year guidance.
However, several analysts showed some concerns about the company’s valuation.
“Palantir’s Q3 was another beat-and-raise quarter, but the stock’s muted after-hours reaction proves that nothing less was expected from the company and that it has become hard to find even higher bidding market participants at these levels,” said Seeking Alpha analyst Florian Muller. My “what you pay versus what you get” analogies in comparison to the Magnificent Seven have Palantir ranked clearly ahead of Tesla but behind Nvidia in terms of valuation against the backdrop of growth and risk, just to give two examples.
The company, which has seen its stock surge about 174% year-to-date, expects fourth quarter revenue to be between $1.327B and $1.331B, above the $1.18B estimate. Palantir raised its revenue guidance to between $4.396B and $4.4B, up from a prior forecast of $4.14B to $4.15B, and above the consensus estimate of $4.17B.
“PLTR’s operating leverage and cash flow are impressive, but its current market cap reflects a “bubblicious” 120x Price-to-Sales multiple, warranting caution,” said Seeking Alpha analyst Ahan Vashi from The Quantamental Investor. “I reiterate a “Strong Sell” rating on PLTR due to its poor long-term risk/reward, despite admiring the underlying business fundamentals.”
Meanwhile, Seeking Alpha analyst Gary Alexander said that he was upgrading Palantir’s stock to a Buy, and added that “I see further upside as commercial momentum and operational leverage drive sustained outperformance despite sky-high near-term valuation multiples.”
Palantir’s third quarter revenue jumped 63% year-over-year to $1.18B, while adjusted EPS amounted to $0.21. Both top and bottom line numbers beat estimates.
However, Wedbush analyst Daniel Ives was positive on the company.
“This was a major validation moment for Palantir about AI demand and the growth trajectory over the next few years which is accelerating at an eye popping pace. Any weakness this am as investors think “this is as good as it gets” philosophy….be buying this stock all day,” said Ives in a post on X.