Why the Appen share price is soaring today

Appen Ltd (ASX: APX) shares are 14 per cent higher to $26.70 today after the machine learning business upgraded its calendar year 2019 guidance for EBITDA to land between $96 million to $99 million.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Appen Ltd (ASX: APX) shares are 14 per cent higher to $26.70 today after the machine learning business upgraded its calendar year 2019 guidance for EBITDA to land between $96 million to $99 million. Previously the company guided for underlying EBITDA to trend towards $90 million. 

The shares have moved a little higher than the 10% upgrade to guidance, with Appen also noting that the updated guidance is before the potential tailwind of a weaker Australian dollar over the last couple of months of calendar 2019.

Appen mainly earns its sales in U.S. dollars and the new guidance is based on an exchange rate of A$1 buying US$0.74c, whereas the spot rate today is around around US$0.68c. This suggests actual EBITDA could land around $100 million. 

On an operational basis it also attributed the improved guidance to more revenue and better margins from existing clients.

Importantly, it also confirmed its material Figure 8 acquisition that could 'make or break' the valuation going forward is performing well. 

Appen is not a classic software-as-a-service tech growth stock, but does have a second-to-none track record of growth and a steady management team.

It also benefits from exponentially growing demand for artificial intelligence or machine learning services across enterprise tech. 

As such it could keep delivering for investors.

Others to watch include Technology One Ltd (ASX: TNE) and EML Payments Limited (ASX: EML). 

Tom Richardson owns shares of Appen Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Emerchants Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Happy miner giving ok sign in front of a mine.
Opinions

Which ASX 200 stock offers 'material upside' amid continuing uncertainty over US tariffs?

Blackwattle Investment has identified one ASX 200 large-cap stock that is thriving on the uncertainty.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why Bapcor, Boss Energy, Macquarie, and Novonix shares are falling today

These shares are having a tough session on Thursday. But why?

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Financial Shares

2 rising ASX financial shares with 'meaningful upside' still left: fundie

Financials outperformed every other sector in FY25, but there are still buying opportunities left, say these experts.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why Fortescue, Lynas, PEXA, and Regis Healthcare shares are charging higher

These shares are having a strong session on Thursday. But why?

Read more »

Stock market crash concept of young man screaming at laptop on the sofa.
Share Fallers

Guess which ASX 200 stock just crashed 31% on slumping sales

The $1.3 billion ASX 200 stock is getting hammered today.

Read more »

A woman walks along the street holding an oversized box wrapped as a gift.
Broker Notes

Fundie reveals why these 3 ASX 200 large-cap shares ripped 35% to 96% in FY25

Blackwattle Investment Partners discusses the performance and outlook for 3 ASX 200 shares in its Large Cap Quality Fund.

Read more »

Five young people sit in a row having fun and interacting with their mobile phones.
Broker Notes

This fund manager just delivered a stellar year and he's bullish on these 5 stocks

With standout returns in both Australian and global equities, Andrew Mitchell shares five high-conviction stocks primed for long-term growth.

Read more »

A woman ponders over what to buy as she looks at the shelves of a supermarket.
Broker Notes

Does Macquarie prefer Woolworths or Coles shares today?

Which supermarket giant was recently named the favourite?

Read more »