Palantir Stock News and Forecast: PLTR aiming for $17.06 after breaking July support


  • Palantir stock broke an important four-month support barrier on Monday.
  • Wall Street was unenthusiastic about Q3 earnings that saw a slowing of government revenue growth.
  • A high Wall Street valuation has not helped PLTR stock.

Palantir (PLTR) was up about 0.9% in the premarket but dropped 1.2% to $20.41 at the open in New York on Tuesday. This pushes PLTR price below that of July 19's $20.55 low and signals that the big data frontrunner is destined for further downside.

Palantir (PLTR) News: Downgrades, valuation keep PLTR in box

The deep sell-off that began on November 9 after Palantir announced fairly stellar Q3 earnings has failed to give up. Despite Palantir reporting 36% YoY revenue growth and 101% YoY US commercial revenue growth, Wall Street baulked at the slowing growth in government contracts. Government revenue grew at a rate of 66% in Q2 but fell to 34% in Q3.

Citigroup reiterated its $18 price target and sell rating. Morgan Stanley reaffirmed its Underweight rating. Wole Research reduced its price target from $25 to $20.

Even Palantir's management increasing its forecast for full-year adjusted free cash flow by about $100 million to "in excess of $400 million" has not improved prospects for the stock.

Not much else has happened to Palantir this month. There have been few if any press releases and the general market has begun to discount hot tech stocks in light of expected central bank tapering and future interest rate hikes. Once extremely heavy revenue growth cools a bit, the market tends to take a longer look at valuation metrics, which still remain heightened for Palantir. For instance, PLTR has a price-to-sales ratio of 29, whereas another hot stock of the pandemic era, Zoom (ZM), now is valued closer to 18x.

PLTR key statistics

Market Cap $43 billion
Price/Earnings 562
Price/Sales 29
Price/Book 20
Enterprise Value $43 billion
Operating Margin -39%
Profit Margin

-36%

52-week high $45
52-week low $17.06
Short Interest 3%
Average Wall Street Rating and Price Target Hold, $23.66

Palantir Stock Forecast: Expect PLTR to touch 52-week low by end of year

July 19's $20.55 has remained the low for PLTR until Monday. PLTR has only trended lightly under this level on Monday and Tuesday, but typically when a four-month barrier is broken it signals that there are more losses on the horizon. Further back, March 5, however, did provide a major bounce off of $20.18.

FXStreet finds it most likely that buyers should not get in until $17.06 – the low from May 11. It probably will not linger in that vicinity long. Just like it did in the first half of the year, we expect it to bounce off this region. There is still plenty of optimism in this stock from major investors, and everyone will notice the May 11 level.

Traders should note that the Relative Strength Index (RSI) is already down in oversold territory at 29, a region that has historically provided a quick boost to the stock. PLTR stock appears aimless this month though, and the likelihood of tech stocks continuing to rationalize their valuations ahead of the new year would seem to suggest that the pessimism will continue.

PLTR daily chart

 

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