Investing.com — UBS initiated coverage of Palantir Technologies (NASDAQ:PLTR) with a Neutral rating and an $80 price target in a research note Thursday, citing strong fundamentals but a valuation that poses challenges.
UBS notes that the stock is currently trading at 49x revenue and 124x free cash flow (FCF) on 2025 estimates, making it difficult for the bank to recommend an immediate buy despite its impressive potential in the AI-data space.
“The main thing keeping us on the sidelines is valuation, which at 49x revs and 124x FCF on 2025 estimates was simply tough to get over,” they wrote.
UBS analysts explained that Palantir is well-positioned for AI-driven growth, describing it as a “key AI-data winner.”
They highlight positive feedback from 17 large Palantir customers, praising the value derived from the Foundry and AIP platforms, particularly in supply chain optimization.
The “DIY AI” trend further supports Palantir’s capabilities, with potential for expanding use cases beyond its current focus, according to the bank.
UBS projects revenue growth of 28% in 2025 and 25% in 2026, above Street consensus.
However, the stock’s valuation remains a significant hurdle for the analysts.
UBS acknowledges that Palantir deserves a premium due to its role in transformative tech shifts like AI-data integration, but a 49x revenue multiple is steep even in this context. Analysts prefer to “stay patient for a better entry point.”
Despite the challenges, Palantir’s fundamentals have driven substantial investor interest, with shares up 333% year-to-date and gaining traction among institutional investors.
UBS believes the company’s strong margins and accelerating revenue growth warrant close monitoring.
