Palantir (PLTR) stock is sinking 6% today after Morgan Stanley analyst Sanjit Singh assumed coverage of the shares with an Underweight rating this morning.
Singh noted that the company had become “a top partner” when it comes to fast AI projects, and he also credited Palntir with “strong execution and momentum.” But the analyst believes that the stock is overvalued.
Moreover, he warned that the shares may not climb significantly above their current levels without solid indications that analysts’ estimates for the firm will rise meaningfully.
Contending that Palantir’s growth is “more than priced in at the” shares’ current valuations, he placed a $60 price target on the name. That’s well below the shares’ current level of about $75.
PLTR stock currently has a gargantuan non-GAAP forward price-earnings ratio of 210.
Also noteworthy is that one of the company’s biggest fans among analysts, Wedbush’s Dan Ives, on Dec. 30 kept a $75 price target and an Outperform rating on the name. So although Ives believes that Palantir can benefit from the Trump administration’s policies and the continued proliferation of AI, his price target as of Dec. 30 was only in line with the shares’ current level.
The Recent Price Action of PLTR Stock
In the last month, the shares have risen just 4%, but they are still up 94% in the last three months.
While we acknowledge the potential of PLTR, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.