Potential US defense budget cuts will help Palantir, not hurt it: Wedbush
Shares of Palantir are getting crushed after reports the Trump administration plans to reduce defense spending by 8% per annum and a filing showing CEO Alex Karp is able to unload about 10 million shares through September 12.
However, Wedbush analyst Dan Ives thinks the markets have it dead wrong when it comes to how much the government will be forking over to the politically well-connected defense and data analytics software company going forward.
“The bears which have hated Palantir from $12 to $120 in the last 18 months now have found their latest ‘silver bullet’ negative thesis around PLTR being exposed to these budget cuts,” he wrote. “This is exactly the opposite of how we believe these DOD cuts will play out as in our view Palantir’s unique software approach will enable the company to gain MORE IT budget dollars at the Pentagon... not less despite these initial knee jerk reactions from the Street.”
The selling pressure also ignores that Palantir is poised to be a beneficiary from a “tidal wave” of government spending tied to AI, he added.
Ives has an outperform rating and $120 price target for the stock.
Separately, JPMorgan analysts led by Bram Kaplan observed that retail traders continued flooding into Palantir, with net buys of $286 million over the past week (through Wednesday).
