Key Takeaways
- Palantir shares fell after Jefferies downgraded the stock to “underperform” from “hold.”
- Jefferies analysts said Palantir was “overhyped” on enthusiasm for artificial intelligence.
- The comments represented a shift from Jefferies’ previous stance, with analysts saying they “underestimated the severity of the slowdown in PLTR’s commercial and government businesses.”
Palantir (PLTR) shares lost 2% in early trading Friday after Jefferies downgraded the stock, with analysts calling it “overhyped” on artificial intelligence (AI), in a shift from the firm’s previous stance.
Jefferies downgraded Palantir to “underperform” from “hold” in an analyst note and lowered the firm’s price target to $13 from $18, saying that the valuation was “unjustifiable.”
The analysts said their view on Palantir changed because they “underestimated the severity of the slowdown in PLTR’s commercial and government businesses, which has resulted in a longer-than-expected demand recovery that could continue to constrain growth through 2024.”
The firm noted Palantir was “one of the largest beneficiaries of the AI trade” in 2023, with shares more than doubling in value last year, but as the company’s government business decelerates, “there is more pressure being put onto PLTR’s commercial business segment to drive overall growth.” Jefferies added that it views the reliance on commercial business to drive growth as a risk.
Palantir shares were down 2% to $15.92 per share as of about 11:30 a.m. ET Friday, but have gained more than 150% over the past year.