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Palantir Stock Falls as Citi Reiterates Sell, Wolfe Cuts Price Target

Palantir shares fall as Citi says its decelerating growth 'came into center view' in the third quarter.

Palantir Technologies  (PLTR) - Get Palantir Technologies Inc. Class A Report slipped Wednesday after Wolfe Research slashed its price target on the data-analytics company's stock, while Citi reiterated its sell rating on concern about decelerating growth.

Shares of the Denver company at last check were down 5% to $23.03.

The analysts' actions come a day after Palantir reported third-quarter results ahead of Wall Street's estimates.

Citi analyst Tyler Radke, who has an $18 price target on the stock, said in a note that Palantir's decelerating growth "came into center view" in the third quarter with weakness in both commercial and government, according to the Fly.

While fourth-quarter guidance was slightly ahead of Wall Street, he said, it still implies slower growth, even on an easier comparison and with significant tailwinds from customer contracting related to special-purpose-acquisition companies.

Wolfe Research analyst Alex Zukin lowered the firm's price target on Palantir to $20 from $25 and kept a peer perform rating on the shares following what he calls an "interesting" third-quarter report. 

He noted that the shares were down after the announcement, which he attributes to a "meaningful top-line deceleration." 

Zukin pointed out that total revenue excluding SPAC contributions of $373 million grew 29% year-over-year, which he said was up only less than $1 million sequentially from the second quarter.

He said his lower price target stems from the core growth deceleration as he is "not yet comfortable assigning a similar confidence interval and multiple to SPAC-based commercial revenue."

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Morgan Stanley's Keith Weiss boosted his price target on Palantir to $24 from $22 and affirmed the stock at underweight. 

He said the company delivered another beat versus consensus expectations "across all key headline metrics" in the third quarter

Weiss said he saw "signs of slowing underneath the hood," as a slowdown in core revenue and commercial growth, coupled with a sharper slowdown in the government segment, opens up the debate on the durability of Palantir's growth.

On Tuesday, RBC Capital analyst Rishi Jaluria downgraded Palantir to underperform from sector perform with a price target of $19, down from $25. 

The analyst cited the company's "mixed" third quarter results with deceleration in the government business, while noting that its commercial acceleration that is being fueled by SPAC investments is "unsustainable". 

Jaluria added that his confidence in Palantr's 30% growth is reduced and he sees the stock as fully valued.

Jefferies analyst Brent Thill was more upbeat, keeping his buy rating and $31 price target for the stock.

“PLTR delivered ahead of expectations on both top and bottom lines … and operating margin, although the magnitude of the top-line beat fell short compared to Q2,” he wrote in a commentary.

Thill liked the acceleration of commercial business and “robust” backlog but is wary of the deceleration of government business and valuation.