The best performer on the ASX 200 index on Monday by some distance has been the Appen Ltd (ASX: APX) share price.
In afternoon trade the shares of the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence are up a massive 14.5% to $26.71.
The next best performers are Coca-Cola Amatil Ltd (ASX: CCL) and Qantas Airways Limited (ASX: QAN). They are up 4% and 2.5%, respectively, following upgrades by equity analysts at Macquarie.
Why is the Appen share price up 14% today?
Investors have been fighting to get hold of its shares on Monday following the release of a guidance update.
According to the release, in the second half Appen has experienced an increase in monthly relevance revenues and margins largely from existing projects with existing customers. As a result, it expects its earnings to be stronger than it guided to at its half year results in August.
Appen was previously expecting underlying EBITDA to be between $85 million and $90 million in FY 2019. This would mean growth of 19% to 26.2% on FY 2018's result.
But management now expects underlying EBITDA to be in the range of $96 million to $99 million. This implies year on year growth of 34.6% to 38.8%.
And if the Australian dollar doesn't strengthen between now and the end of the year, this guidance could be lifted further.
Management advised that this forecast is based on a foreign exchange rate of 74 U.S. cents to the Australian dollar. However, the Australian dollar is currently fetching 68.2 U.S. cents. As a result, it estimates that a further $1 million to $1.5 million could be added to underlying EBITDA if exchange rates stay the same.
Figure Eight update.
Another positive that is going down well with investors is its Figure Eight update.
Management reinforced its high conviction for the acquisition of the Figure Eight business. It also confirmed its previous 2019 ARR guidance of $30 million to $35 million. Once again, this is based on the Australian dollar trading at 74 U.S. cents.
There have been concerns that the Figure Eight acquisition was a bit of a dud, so this appears to have put shareholders at ease.
This guidance, along with its overall guidance, remains susceptible to upside or downside factors. These include the timing of work from major customers and Australian dollar fluctuations.
