Palantir (NYSE:PLTR) was cut to Hold from Buy at HSBC on Wednesday, with analysts maintaining a $22 per share price target on the stock, saying its valuation is full.
Analysts told investors in a research note that Palantir’s latest guidance for 2024 implies its continued focus on operating efficiency and top-line growth, which was one of the key drivers of the company’s strong financial results for 2023.
"We think Palantir is well positioned to benefit from the strong demand for its artificial intelligence products, especially in the faster-growing Commercial segment, while growth in the Government segment will likely reaccelerate with the potential execution of government contracts in 2024e and higher defense spending," they wrote.
The firm also notes that PLTR's commercial business is witnessing a strong acceleration, especially in the US, as demand for the company’s AI platform remains strong.
Despite the positives and what HSBC describes as an "impressive growth outlook," they believe it has "become 'rich' at PEG of 3.16x for 2024e."
"We downgrade to Hold but not Reduce as we believe the stock remains highly leveraged to the rising adoption of AI," said analysts.