Top broker names Appen (ASX:APX) share price as a buy

The Appen share price has lost half of its value this year. Is this a buying opportunity?
The post Top broker names Appen (ASX:APX) share price as a buy appeared first on The Motley Fool Australia. –

The Appen Ltd (ASX: APX) share price certainly has been out of form in 2021.

Since the start of the year, the artificial intelligence data services company’s shares are down 50%.

This compares to a 12% gain by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Why is the Appen share price under pressure on 2021?

Investors have been selling down the Appen share price this year due to the impact that COVID-19 was having on demand for its services.

In May Appen’s CEO, Mark Brayan, commented: “COVID interrupted many businesses last year and that in turn reduced their digital ad spend for a period. This impacted our major customers’ sources of revenue, and although digital ad spend has bounced back nicely, that experience is driving them to invest in new AI products that are less reliant on advertising.”

Also weighing on the Appen share price were comments about data privacy and anti-trust concerns that were impacting developments.

Mr Brayan said: “Our customers are developing new AI products in response to COVID’s impact on online advertising last year and regulatory pressures such as anti-trust and data privacy. This dictates the data they need for product development and impacts their engineering resource allocations and the volumes and types of data they need from us.”

“As stated before, machine learning is an iterative process, and our customers are switching resources between development projects as they pursue new break-out products. This in turn has impacted a handful of our larger programs,” he added.

Is this a buying opportunity?

One leading broker that believes the weakness in the Appen share price could be a buying opportunity is Citi.

A note from this month reveals that its analysts have retained their buy rating and $18.80 price target on the company’s shares.

This is despite the broker suspecting that a slower recovery in demand could lead to Appen falling short of the market’s first half EBITDA estimates this month due to lower margins.

Citi is expecting EBITDA of US$27 million for the half, which is ~20% lower than consensus estimates.

Based on the current Appen share price of $12.71, Citi’s price target implies potential upside of 48% over the next 12 months.

Citi is more positive on its longer term prospects. It believes Appen is well placed to benefit from the higher spending on artificial intelligence in the future. It also expects the company to leverage its increased capabilities and expand its addressable market.

The post Top broker names Appen (ASX:APX) share price as a buy 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 nearly 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 August 16th 2021

More reading

Appen share price (ASX:APX) up 6% ahead of earnings this week
Here are 3 buy-rated ASX growth shares

Why the Appen (ASX:APX) share price fell 7% last time it reported
2 excellent ASX tech shares with strong growth potential

Why AGL, Appen, CBA, & Rio Tinto shares are tumbling lower

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 shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of 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.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!