The Appen (ASX:APX) share price is down 16% in a month. Is now the time to buy?

Three brokers offer their perspectives on the Appen share price.

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Key points

  • Appen shares have fallen by 16% in a month and 60% over 12 months 
  • The share price hit a multi-year low of $6.08 after the AI company missed its EBITDA guidance for FY21 
  • A few brokers give their take, all reducing their price targets for the next 12 months

The Appen Ltd (ASX: APX) share price has been hit hard since the release of its full-year results.

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.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Aaron Teboneras owns Appen Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Appen Ltd. The Motley Fool Australia has recommended Macquarie Group Limited. 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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