Wall Street analysts think that Palantir Technologies will decrease 40% this year. Are they right?

Palantant (Pltr 1.70%)) is one of the actions of the hottest artificial intelligence (AI). It has increased by 362% astronomical since the beginning of 2024 and has shown small signs of slowdown. However, the consensus among Wall Street analysts is that this stock is considerably overvalued. According to Yahoo! Finance, the average price objective among the 22 analysts is $ 46.01. Compared to today’s equity of around $ 75, which represents a downside of 40%.

No one wants to see their investments decrease by almost half, so understanding where these analysts come from is essential. It is not often that a stock is up to the objectives of analysts.

The prowess of the Palantir AI have led to strong growth

Palantir has become a popular choice in AI space because it was in the AI ​​game much longer than most of its competitors. It was founded in 2003 and initially provided AI software to government entities to help decision -making. The use case ultimately extended to commercial customers, considerably expanding its market opportunities. Government’s revenues still represent the majority of the Total of Palantir, the T3 income division of $ 408 million in government customers and $ 317 million in commercial customers.

The growth of palantants has been strong, revenues increasing by 30% in the third quarter. As other important note, Palantir is also fully profitable, with a solid beneficiary margin of 20% in the third quarter. These are solid figures, but the problem that analysts tackle with Palantir actions are not its commercial opportunities or its current growth, it is the quantity of expectations that are cooked during the current palantant action.

The expectations of palanting far exceed reality

The palantant stock is not cheap. It is negotiated against a breathtaking saving of a breathtaking ride 397 times and 138 times the long -term income.

PLTR PE RATIO Data by ycharts

These are incredibly high levels, which makes it difficult to justify the course of palantants with its current growth.

Some bulls might emphasize that Palantir could always extend its beneficiary margin to reduce some of these profits based measures. However, the price / sales ratio (p / s) of Palantir of 72, compared to other software companies that not profitable, is always incredibly expensive.

Pltr PS ratio Data by ycharts

Some of the highest software companies are negotiated for 20 to 30 times sales, which means that Palantir is assessed more than double those of these companies. Now, all of this could be justified if Palantant increased his income incredibly quickly, but that is not the case.

To illustrate this, let’s look at the price of growth over a period of five years. To give to Palantir the best case Scenario, suppose these things:

• The growth of palantants is 30% for the next five years.
• The profit margin of Palantir extends to 30%.
• The dilution of actions due to the remuneration based on shares is ignored.

In this spirit, after a period of five years, Palantir will have revenues of $ 9.82 billion and profits of 2.95 billion dollars. Although this is a solid increase compared to the $ 2.64 billion today and $ 477 million in profits, this still does not justify the course of the action.

Palant would have a price / benefit ratio (P / E) of 61 at these profit levels. So after five years of action not upwardsPalantir would always be more expensive than many large technological companies.

Two of these three hypotheses are also mediocre. Wall Street analysts provide for 25% income growth in 2025, a good quantity less than the sustained growth of 30% used above. In addition, Palantant has high levels of dilution of shareholders, its number of shares increasing by 3% from one year to the next.

It would not surprise me if palantant reaches a 30%profit margin, but it is only one of the hypotheses required to palantant always Being expensive after a five -year period.

Although I do not know if Palantir shares will decrease by 40% in 2025, that would not surprise me if there was some sales pressure once the media investment was died. The palantant stock is simply too expensive to justify its current price, and I sold actions now if I owned it.

Keithen Drury has positions in Nvidia. The Motley Fool has positions and recommends NVIDIA and PALANTOUT technologies. The Motley Fool has a policy of disclosure.