Appen share price sinks 7% to 4-year low. Time to pounce?

Could the Appen share price have better days?

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Key points

  • The Appen share price has lost 7% in today's trade alone 
  • Analysts are cautious on the outlook for the company's share price 
  • However, Appen has a plan to double revenue by 2026 

The Appen Ltd (ASX: APX) share price is tumbling today, but could it turn around in the future?

The technology company’s share price has fallen nearly 7% today and is currently trading at $5.53. For perspective, the S&P/ASX All Technology Index (ASX: XTX) is down nearly 1% today.

So what are analysts tipping for the Appen share price?

What’s the outlook for the Appen share price?

The Appen share price is currently trading at its lowest price since November 2017, a more than 4 year low.

Appen is a technology company that provides data for machine learning and artificial intelligence. Appen’s customers include technology giants such as Google, Amazon, Microsoft and Salesforce.

But on Monday, Appen was booted out of the benchmark S&P/ASX 200 Index (ASX: XJO) as part of the June quarterly rebalance. Shares fell nearly 4% on this day.

Analysts at Citi have recently cut the company’s shares to a neutral rating and cut the price target by 28%. However, Citi still has a $6.60 price target on the Appen share price, which is a nearly 20% upside on the current share price.

The broker downgraded its outlook on Appen due to a tough start to FY22. Citi said that this “weakness was primarily due to one customer”. As my Foolish colleague James reported, Citi thinks this customer could be Facebook based on its analysis. Citi believes Appen will need to have a stronger second half of the year.

However, in an address to shareholders at the company’s AGM in late May, CEO Mark Brayan outlined Appen’s plans to double revenue by 2026. Brayan said:

We have always been ambitious in growing our business.

By 2026 we are aspiring to at least double FY2021 revenue of US$447 million, improve the mix of our business with one-third revenue from non-Global customers and achieve an EBITDA margin of 20%

Bell Potter recently retained a hold rating on the company’s shares with a $6.50 price target. The broker downgraded the company’s earnings per share (EPS) predictions by 5% for 2022, 5% for 2023 and 4% for 2024.

Appen share price snapshot

The Appen share price has slumped 57% in the past year and plummeted 51% in the year to date.

For perspective, the benchmark ASX 200 index has lost about 3% in the past year.

Appen has a market capitalisation of about $679.9 million based on the current share price.

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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