The Appen Ltd (ASX: APX) share price was sold off on Thursday following the release of the artificial intelligence data services company’s full year results.
The company’s shares ended the day a massive 29% lower at $6.11.
This means the Appen share price is now down a very disappointing 70% from its 52-week high.
Is the Appen share price weakness a buying opportunity?
The team at Bell Potter has been running the rule over Appen’s results and has given its verdict on its shares.
Unfortunately for any investors thinking that the Appen share price could now be an absolute bargain buy, its analysts aren’t convinced and are suggesting that investors keep their powder dry for the time being.
According to the note, Bell Potter has retained its hold rating and slashed its price target by 41% to $6.75.
What did the broker say?
Bell Potter notes that Appen’s full year results fell short of expectations.
It said: “Underlying EBITDA of US$77.7m was 4% below our forecast and the low end of the US$81-88m guidance range (which Appen had previously guided to). The miss was driven by both lower revenue than forecast (US$447.3m vs BP US$455.1m) and EBITDA margin (17.4% vs BP 17.8%). Operating cash flow was down 17% to US$53.9m and the cash conversion rate decreased from 103% to 77%. The final dividend of A5.5c 50% franked, however, was in line with our forecast.”
The broker also points out that Appen is not providing guidance for FY 2022 but has provided longer term targets. And while the latter has led to Bell Potter increasing its revenue forecasts slightly, it has taken a hammer to its earnings estimates due to weaker margins.
Bell Potter explained: “We have upgraded our revenue forecasts by 2% and 5% in 2022 and 2023. Our forecast revenue growth is now in the low double digit percentages which is below the mid teens growth required to double revenue by 2026. We have, however, downgraded our underlying EBITDA forecasts by 13% and 14% in 2022 and 2023 due to reductions in our margin forecasts to around 16% in both periods.”
The post Is the Appen (ASX:APX) share price meltdown a buying opportunity? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Appen right now?
Before you consider Appen, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Appen wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- ASX wipes out $73 billion as Russia invades Ukraine
- Why Appen, City Chic, Flight Centre, and Life360 shares are sinking
- ASX tech shares have been smashed today as market hits 3-week low
- ASX 200 (ASX:XJO) midday update: Appen and Life360 crushed, Flight Centre posts $188m loss
- Appen (ASX:APX) share price crashes 17% after FY21 guidance miss
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Appen Ltd. The Motley Fool Australia owns and has recommended Appen Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/yGzZ1ie
Leave a Reply