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The Appen share price jumped 12% higher in November

The Appen Ltd (ASX: APX) share price returned to form in November.

The shares of the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence climbed 12% last month.

This compares to a 2.7% gain by the benchmark S&P/ASX 200 index.

Why did the Appen share price race higher in November?

Investors were fighting to get hold of Appen’s shares last month after the release of an update to its full year guidance.

According to the release, Appen has been experiencing stronger than expected demand for its Content Relevance services during the second half of FY 2019. This has been driven largely by an increase in revenues and margins from existing projects with existing customers.

It was previously expecting underlying EBITDA to be between $85 million and $90 million in FY 2019. This represented growth of 19% to 26.2% on FY 2018’s result.

However, it 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%.

But it doesn’t end there. The guidance that Appen provided is subject to currency movements. Based on the exchange rates at the time, management believes a further $1 million to $1.5 million could be added to its underlying EBITDA if the Australian dollar doesn’t strengthen.

Figure Eight performing well.

Also getting investors excited was news that its recently acquired Figure Eight business was performing well.

In its update management reinforced its high conviction for the acquisition of the Figure Eight business.

It confirmed its previous 2019 ARR guidance of $30 million to $35 million, based on the Australian dollar trading at 74 U.S. cents.

This was particularly good news as many investors were nervous that the Figure Eight acquisition was a mistake. But this has gone some way to easing those nerves.

Should you invest?

I continue to believe that Appen would be a good investment option due to its exposure to the rapidly growth AI and machine learning markets.

I’m not alone with this view. According to a note out of E.L. & C. Baillieu, it has a buy rating and $29.32 price target on Appen’s shares.

Its analysts expect Appen to deliver earnings per share of 70.9 cents in FY 2020. This means its shares are changing hands at 35x estimated FY 2020 earnings.

I think this is good value given its current growth profile and would buy it along with fellow tech stars Altium Limited (ASX: ALU) and Bravura Solutions Ltd (ASX: BVS).

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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 Bravura Solutions Ltd. The Motley Fool Australia owns shares of Altium and Appen Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.