The Appen Ltd (ASX: APX) share price had a day to forget on Monday.
The artificial intelligence (AI) data services company's shares crashed 32% to $1.52.
This left Appen trading at its lowest levels in over seven years.
Image source: Getty Images
Why did the Appen share price crash deep into the red?
Investors were hitting the sell button following the release of yet another disappointing result from the struggling tech company.
In case you missed it, for the six months ended 30 June, Appen reported a 24% decline in revenue to US$138.9 million and an underlying net loss after tax of US$24.2 million. It also now expects its second-half revenue to be softer than previous guidance.
Is this a buying opportunity?
According to a note out of Bell Potter, its analysts don't believe investors should be rushing in to buy the company's shares.
In response to the result, the broker as retained its hold rating and slashed its price target by 23% to $1.70.
While this implies a potential upside of almost 12% for the Appen share price, Bell Potter doesn't seem to think that the risk/reward on offer is sufficient enough for investors to dive in.
Commenting on the result, the broker said:
Appen reported 1H2023 revenue of US$139.5m which was 3% below our forecast of US$144.5m. The miss was driven by lower Global Services revenue than we forecast (US$100.1m vs BPe US$105.7m) while New Markets revenue was in line. Underlying EBITDA was a loss of US$(18.1m) which was greater than our forecast loss of US$(16.5)m.
Looking ahead, the broker has downgraded its estimates for the coming years. It adds:
We have downgraded our 2023, 2024 and 2025 revenue forecasts by 10%, 6% and 5%. We now forecast 2H2023 revenue of US$142.9 which is modestly up on 1H2023 revenue of US$138.9m. We have increased the forecast underlying EBITDA loss in 2023 from US$23.2m to US$26.0m and downgraded our underlying EBITDA forecasts in 2024 and 2025 by 55% and 40%.
