On 24 February, the artificial intelligence (AI) company’s shares tanked 28.7%, hitting a multi-year low of $6.08.
Currently, the Appen share price is $7.09, up 0.85% for the day. This is a stark contrast from when Appen shares were hovering around the $18.50 mark this time last year.
Below, we take a look to see if Appen shares are a buy at their current price.
Why is the Appen share price near multi-year lows?
Lately, Appen hasn’t replicated the successes it saw during its first five years on the ASX boards. Since COVID-19 hit, the company has struggled to accelerate its growth profile to match the market’s expectations.
In the 12 months to 31 December 2021, Appen recorded a sound business performance. Its global services segment continued to drive the business, while its new markets division also drove up the overall result.
Despite the growth, Appen fell short of its earnings guidance and its share price was consequently smashed.
In its FY21 interim results, Appen downgraded its EBITDA guidance to the low end of US$81 million to US$88 million. It recorded an actual EBITDA of US$77.7 million or US$78.9 million excluding foreign exchange impacts.
In addition, the company reported a decline of 19.9% in statutory net profit after tax (NPAT) of US$28.5 million.
Is Appen a buy?
After reporting its full-year results, a number of brokers rated the company with varying price points.
JPMorgan downgraded its outlook on Appen shares from overweight to neutral. It also cut the 12-month price target for Appen by a sizeable 48% to $7 per share.
Bell Potter and Macquarie also slashed their price targets by 41% to $6.75 and 40% to $5.70 respectively.
Based on the above, this implies a current downside of 4.8% and 19.6% respectively.
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