Shares of Palantir (PLTR) dropped more than 5% on Monday as the stock reacted to a new rating from Wall Street.
Analysts from Morgan Stanley re-initiated coverage of Palantir with a “sell” recommendation. The firm set their price target for Palantir shares at $60, roughly 25% lower than the stock’s current price near $80.
Palantir is no stranger to unimpressed Wall Street analysts. In November, Palantir’s CEO Alex Karp made comments regarding the company’s lack of a following on Wall Street. Karp made the point that he loves that his company is an underdog from Wall Street’s perspective.
To the CEO’s point, it can often be the case that underloved stocks can outperform the markets. Call it a “Wall of Worry” that these stocks can climb quickly.
Companies like Microsoft (MSFT), Apple (AAPL) and Amazon (AMZN) all boast high “buy” recommendations from Wall Street but have underperformed companies like Palantir.
Over the last year, Palantir shares have returned 375%, almost doubling (80%) NVIDIA’s performance of 205%. Palantir’s last six months have been marked by the company’s signing of numerous contracts as businesses and the Government turn to Palantir as an AI Service company.
Palantir shares are trading 10% below their all-time highs as the stock has spent the last two weeks working off a technically overbought reading of its RSI.
Investors should expect the stock to trade with the support of its 20-day moving average. That trendline is currently at $75. A break below this short-term trendline could see Palantir shares lose another 14% as they drop to support at the 50-day moving average.
A correction to its 50-day moving average would mark a 24% from the stock’s recent highs, likely triggering a strong “buy the dip” reaction from investors.
Palantir shares maintain a strong bull market outlook with a price target of $100.
