Palantir Stock Rises With Earnings Looming. There Is Talk of a Stock Split.

Many Palantir retail investors are eyeing a potential stock split ahead of third-quarter earnings, according to RBC Capital Markets. (David Paul Morris/Bloomberg)

Key Points

• Palantir Technologies is a polarizing stock, with investors focusing on its upcoming third-quarter earnings.
• RBC Capital Markets analysts rate Palantir at Underperform with a $45 price target, citing its unsustainable valuation.
• Citi Research analysts maintain a Neutral rating, raising their price target to $190 on the stock.

Palantir Technologies has become one of the most polarizing names on Wall Street, and expectations are high heading into the data-analytics giant’s third-quarter earnings report.

Many investors are wondering how results will stack up to last quarter’s blowout beat and raise, but that isn’t the only area of focus. RBC Capital Markets analysts cited increasing chatter about a potential stock split, calling it Tuesday “the most relevant topic” among retail investors.

Palantir hasn’t conducted a stock split once in its history as a publicly traded company. While the move wouldn’t change the company’s sky-high valuation, it could make shares more accessible to investors after experiencing sharp appreciation in the past year.

If Palantir opted for a stock split, it would be following in the footsteps of other AI heavyweights like Nvidia , which conducted a 10-for-1 split in June 2024.

Other topics of conversation have piqued the firm’s interest. A poll of retail investors revealed “heightened concern around privacy and ethics” as well as heightened frustration around “the absence of some form of capital returns,” considering Palantir’s $6 billion cash balance.

“We cannot rationalize why Palantir is the most expensive name in our software coverage,” analysts wrote. Without a substantial earnings beat and guidance raise elevating the near-term growth trajectory, “valuation seems unsustainable.”

RBC Capital Markets rates Palantir at Underperform with a Wall-Street-low price target of $45. Shares were up 0.6% at $190.56 on Tuesday. The stock has gained 152% this year and 324% over the past 12 months.

One can’t mention Palantir without acknowledging its stretched valuation. As of Monday, the data-analytics giant was trading at a forward price-to-earnings ratio of 234.23. The benchmark S&P 500 index, by comparison, was trading at a forward P/E of around 23.24.

Citi Research analysts led by Tyler Radke reiterated a Neutral rating on the stock in a separate note Tuesday, pointing to Palantir’s “extreme valuation paired with risk of more moderated revision trends.” The analysts slightly raised their price target to $190 from $177.

The firm conceded that Palantir exhibited an “uncharacteristically large” earnings beat and guidance raise last quarter. Citi expects revenue upside in the five-point range and a more modest full-year guidance raise of around three points.

This still implies accelerating growth, but a smaller revision quarter over quarter, “within historical averages and potentially missing the heightened expectations set by last quarter’s historic raise of ~7pts,” analysts wrote.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com