Palantir’s stock was 21.3% less on Monday, following disappointing Q3 guidance and Wall Street Expectations.

Rishi Jaluria, RBC analyst, has downgraded shares from Sector Perform to Underperform with a $6.00 target share price, down from $12.00. The analyst has “decreased confidence in PLTR achieving its 30%+ growth target.”

“Although we expected PLTR near-term upside from US federal budgets being passed in mid-March and ongoing geopolitical tensions overseas, results were disappointing to us given: 1) 1Q topline lacked upside to consensus; 2) 2Q guide missed consensus on both revenue growth & profitability; and 3) Total Deal Value growth ex ‘investment agreements’ declined both Y/Y and Q/Q. The lone positive was mgmt’s decision to wind down the investment program but this doesn’t change the underlying business fundamentals,” Jaluria said in a client note.

Citi analyst Tyler Radke lowered the PT by $7.00 per share, from $10.00 due to further slowing growth.

“Palantir’s underlying growth continued to slow in Q1 with the smallest quarterly revenue beat to date and Q3 guidance below the street and the company’s 30% target. After adjusting for SPAC revenue growth, the metrics showed even more negative results with minimal revenue growth in commercial deals and a slowdown of total/commercial revenues. While management expressed optimism in Government growth rebounding in 2H from budget resolution and ongoing Ukraine conflict, it’s difficult to put much confidence in this with most Q2 leading indicators suggesting slowing growth, and incrementally weaker profitability,” the analyst told clients.

Radke also caught up with PLTR’s management after the Q1 call. These are some key points:

• Guidance philosophy unchanged.
• Managers remain confident that growth will re-accelerate in the second half;
• The back-half should see a recovery in margins, as PLTR incurred incremental costs from the Ukraine situation.
• Only contracts with high certainty of closure are included in the Q2 guidance.

By Senad Karaahmetovic