Down 77%! Is the Appen (ASX:APX) share price a buy today?

One top broker reckons so…

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A woman in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains that one top broker thinks the Appen share price is a buy

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Key points

  • Appen used to be a high-growth WAAAX share market darling
  • The company has had a stunning fall from grace
  • When will the tide turn for Appen?

It certainly hasn’t been a great month for most ASX shares. As my Foolish colleague Bernd covered today, the S&P/ASX 200 Index (ASX: XJO) has officially slipped into correction territory. This is defined as a 10% or more drop from the most recent high. But it has been an especially punishing time to own Appen Ltd (ASX: APX) shares.

The Appen share price is down by 17.6% in January alone, despite a 5% gain today. The company’s shares have fallen by a horrible 60% over the past 12 months on the ASX.

Not only that, Appen is also down close to 77% from its all-time high of $40 reached in August 2020. Currently, the Appen share price is $9.18.

It’s a stunning fall from grace for what used to be one of the market’s most exciting growth shares.

Appen is (or at least was) a member of the WAAAX group of ASX shares. Like its fellow WAAAXers Afterpay, WiseTech Global Ltd (ASX: WTC), Xero Limited (ASX: XRO) and Altium Limited (ASX: ALU), Appen used to be a top pick for those wanting exposure to companies at the forefront of the ASX tech sector.

While some WAAAX shares have gone to new heights since 2020, and Afterpay has been acquired, the Appen share price remains in the dirt.

So what’s in store for the annotated dataset provider? After this 77% fall, is the bottom finally here?

Is the Appen share price in the buy zone?

Well, one broker who thinks it might be is Citi. As my Fool colleague James covered last week, Citi has retained a buy rating on Appen shares. However, it has pared its 12-month price target down to $14.80 a share. Even so, if Appen were to hit that share price over the next year, it would represent a 61% gain.

Citi is bullish on Appen because it reckons the company has a fair chance of achieving its FY21 guidance. Therefore, it estimates that ASX investors might be too pessimistic about Appen shares. No doubt Appen’s long-suffering investors will be keeping their fingers crossed that this turns out to be the case.

At the current Appen share price, this company has a market capitalisation of $1.1 billion. Its dividend yield is 1.12%.

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

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen 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.

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