Why This Analyst Downgraded Palantir As Economy 'Appears To Be In Recession'

Palantir Technologies Inc. PLTR was downgraded from a Buy rating to a Neutral rating with no given price target on Friday by analysts at Monness Crespi Hardt & Co. Inc.

The strength of the software company’s stock “will prove unsustainable in the current environment,” according to analyst Brian White.

Palantir is now trading some distance below its former highs.

“In our view, Palantir is well positioned to benefit from strong secular trends around digital transformation, Big Data, the cloud, and artificial intelligence; however, the economy appears to be in a recession, equity markets are in turmoil, and the geopolitical landscape is unpredictable,” White said.

The tech-heavy NASDAQ-100 index and the S&P 500 Information Technology sector are down 27.92% year-to-date, and 20.33% year-to-date respectively, while Palantir shed 45.66% of its value this year.

The analyst is critical of Palantir because of its competition in the sector, its struggle to gain credibility because of rotating investor interest, and unforeseen economic headwinds.

This report comes just one day after analysts at Raymond James initiated coverage on Palantir with a Strong Buy rating, with a price target of $20 — indicating an upside of 100.10% from current levels.
See Also: Why This Palantir Analyst Says Stock Is A 'Unicorn' That Could Double In 1 Year
"In this case, we see Palantir as a cultural unicorn, almost mythical,” said analysts at Raymond James on Thursday. “Because we can’t think of many multibillion-dollar tech franchises that reject the Chinese market or rebuff China as a low-cost source of labor/manufacturing.”

Palantir shares are up more than 5.67% this week — with the entire tech sector being dragged up by Netflix Inc. NFLX, which is trading more than 14% higher this week on the heels of better-than-expected earnings.

Raymond James expects Palantir to grow sales to $1.98 billion in 2022, and $3.22 billion by 2024, saying the company has significant growth opportunities and compelling competitive advantages.

Disclaimer: The opinions expressed in this story are solely those of the featured analysts.