What’s up with the Appen share price on Wednesday?

There’s still plenty of love for Appen, despite the recent volatility.

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Key points

  • Appen shares are trading down in 2022 alongside the wider tech sector, as investors continue to sell off ASX tech shares 
  • Analysts have become less constructive on the stock, however, a number of brokers still reckon its a buy based on various factors 
  • In the last 12 months, the Appen share price has slipped more than 41% into the red 

Shares of Appen Ltd (ASX: APX) have struggled so far in 2022 and now trade down in the red.

At the time of writing, the Appen share price is $6.38 apiece, a 2% dip on the day.

Zooming out, the Appen share price is down 42% this year to date, as global tech baskets remain bottom-heavy and continue to present challenges to investors.

What’s up with the Appen share price?

Tech stocks have taken a beating in 2022 as global equity markets undergo somewhat of a testing moment. The result has been a bloodbath to global tech baskets since trading restarted in January.

In particular, the S&P/ASX All Technology Index (ASX: XTX) has collapsed more than 30% and is down 15% in the past month alone.

As such, it’s been an incredibly difficult time for names such as Appen.

Not helping the picture was the company’s underperformance in its most recent earnings back in February.

This is one point analysts at JP Morgan note in their downward revision on the company in a note at the time.

“Appen’s FY21 result was a miss on JPM estimates and [Appen’s] guidance,” it noted. “Cash conversion was weak…No guidance provided for FY22, with management highlighting higher 1H22 costs…Order book to date appears worse than in prior years,” it said just to name a few.

As a result, the broker downgraded its recommendation to neutral, urging clients to hold for the time being.

We believe APX’s 2026 target to double revenue seems very ambitious given management recent track record. Although the stock has likely oversold in the short term, the lack of visibility on growth and heightened levels of reinvestment means we would prefer to stay on the sidelines until management starts delivering on their guidance. Downgrade to Neutral.

Meanwhile, 33% of analysts covering the company advocate it as a buy right now, according to Bloomberg data.

In particular, Barrenjoey Capital Markets and Jefferies value the company at $13.20 and $12 per share respectively, suggesting large upside if they are correct.

Macquarie on the other hand values it at $5.70 per share, advocating clients to sell at the same time. Bell Potter holds the same view. That’s behind the consensus price target of $8.17 per share, per Bloomberg.

Appen share price snapshot

In the last 12 months, the Appen share price has slipped more than 41% into the red and is down 42% this year to date.

The trend has continued and shares have sunk a further 5% in the past month of trade.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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