New Palantir Price Target as Pros Reduce Their Exposure

Back on January 5, I warned readers that Palantir Technologies (PLTR)  had entered the "Danger Zone" as the stock had developed a rising-wedge pattern of bearish reversal.

While I did not change my $238 target price at the time, I did inform readers that depending on how deep the sell off became, I might have to. The stock was trading at $175.80 at the time and was coming off of a $198.88 December apex. The stock traded with a $165 handle on Tuesday and is struggling on Wednesday morning as well despite a broad, and quite positive market response to President Trump's speech in Davos. 

The chart has changed yet again, and earnings loom for Palantir. Yet again, we have to game plan to better manage our long position in the name.

There's News

On Tuesday, HD Hyundai and Palantir Technologies strengthened their corporate alliance and strategic partnership. This partnership, which is Palantir's largest and longest standing (going back to 2021) deal in Korea, expands the adoption of Palantir's Foundry and artificial intelligence platform (AIP) across the entirety of the Hyundai Group. Hyundai's heavy industrial businesses, such as shipbuilding, heavy equipment manufacturing, robotics and electric systems, are expected to benefit. Reuters reported at the time that the deal is believed to be worth "hundreds of millions" of dollars.

On Wednesday, U.K.-headquartered Sovereign AI, a provider of AI infrastructure, announced that the firm had selected Accenture (ACN)  and Palantir Technologies to help build out and scale the firm's next generation data centers throughout Europe, the Middle East and Africa. This deal will help accelerate the development and deployment of the Dell (DELL)  AI Factory for Sovereign AI as well as its Nvidia (NVDA)  powered AI capabilities. Palantir will provide its operating system, known as Chain Reaction, to the collaboration.

Earnings

Palantir is set to report after the close of business on Monday, February 2. 

At this time, Wall Street is looking for an adjusted EPS of $0.23 on revenue of $1.34 billion. This would compare well to the year-ago comp of $0.14 while that sales print would be good enough for annual growth of better than 62%. Very interestingly, of the 21 sell-side analysts that I can find that cover PLTR, all 21 have revised their estimates higher since the start of the period.

The Chart​

There's still some trouble on this chart. ​The stock has lost its 21-day EMA as well as it's 50-day SMA for the second time in less than a month. This is what compelled professional managers to reduce long-side exposure.

Above the chart, relative strength has fallen through the neutral zone and is now visibly weak. The daily MACD, below the chart, is postured bearishly as well. The histogram of the nine-day EMA had gone decisively negative and has remained there since late December. The 12-day EMA had crossed below the 26-day EMA a month ago as well and never recovered. These are bearish signals.

However, there is a bright spot. On its way, potentially to the stock's 200-day SMA down around $156, the stock appears to have stalled here in the mid-$160s. This has created a possible (not confirmed) double-bottom pattern of bullish reversal. What does that mean? That means that if support is found here, the pattern's $187 pivot becomes the pivot. Failure here and I'll see you at the thin red line.

Target Price: $217 (down from $238)

Pivot: $187 (down from $190) 

Add: Here, small

Panic: Loss of the 200-day SMA (currently $156)

At the time of publication, Guilfoyle was long PLTR and NVDA equity.