ASX 200 drops on Thursday

The S&P/ASX 200 Index (ASX:XJO) dropped back on Thursday. The Appen Ltd (ASX:APX) share price fell around 10% after an update.

| 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

The S&P/ASX 200 Index (ASX: XJO) fell by 0.55% today to 6,691 points.

Here are some of the highlights from the ASX:

Appen Ltd (ASX: APX)

The Appen share price fell by around 10% after giving an update today.

The AI machine learning data business said that whilst its FY20 third quarter was lower than expected, its major customers released strong third quarter results and online advertising bounced back. This, and the fact its fourth quarter revenue has historically averaged 30% of its full year results, gave Appen the confidence to maintain its market guidance up until today.

However, Appen's November results, which have just been finalised, show that while the fourth quarter has improved compared to the third quarter, the usual ramp up it traditionally sees at this point is not occurring. Appen said that COVID-19 has disrupted and reshaped the priorities and activities of its customers, especially in California where its biggest customers are based. It has also impacted its face to face sales and customer engagement practices.

The ASX 200 share is now expecting its FY20 underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of $106 million to $109 million at the actual exchange rate of AU$1 to US$0.74 for December. This is equivalent to a guidance range of $108 million to $111 million after applying the originally assumed exchange rate of US$0.70 for the second half.

Regarding the second half, Appen said: "second half underlying EBITDA is expected to grow at 30% plus over the first half", applying first half exchange rates to second half performance.

Appen commented its major clients are reprioritising resources towards new product areas that enhance their long-term resilience and value which is currently impacting work volumes on some large mature projects. However, management believe this product development trend is positive for the company and it's seeing a significant increase in the number of new projects amongst it major customers, although some are early in the lifecycle.

It's also winning new customers in markets less impacted by COVID-19, including in new business areas such as shipping, automotive, education and health care.

Appen also said the long term trends for the business are very positive and spending on artificial intelligence is growing rapidly. It's expecting a return to strong growth rates in 2021.

Link Administration Holdings Ltd (ASX: LNK)

The Link share price went up 0.9% today after it gave an update about the SS&C Technology bid to acquire Link for $5.65 per share.

Link's board said it has carefully considered the SS&C proposal, including obtaining advice from its financial, tax and legal advisors. It has decided the offer does not represent compelling value for shareholders on a control basis. However, the board thought it was appropriate to provide SS&C with due diligence information on a non-exclusive basis so that it can develop a proposal that may be capable of being recommended to shareholders.

The board of the ASX 200 company noted that the SS&C proposal is non-binding and indicative in nature and subject to numerous conditions, including due diligence, unanimous Link board approval and securing debt finance.

The due diligence will be provided subject to entry into an appropriate confidentiality agreement containing suitable protections for Link, including a stand-still clause.

However, Link said there can be no certainty a proposal will eventuate and shareholders don't need to take any action.

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Appen Ltd and Link Administration Holdings Ltd. The Motley Fool Australia has recommended Link Administration Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A young man punches the air in delight as he reacts to great news on his mobile phone.
Broker Notes

These ASX 200 shares could rise 30% to 50%

Brokers have good things to say about these cheap shares.

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Share Market News

Record CBA share price and Iran-Israel ceasefire lift ASX 200 financials to new peak

ASX financial shares led the 11 market sectors last week, gaining 1.82% and reaching a record high.

Read more »

A female ASX investor looks through a magnifying glass that enlarges her eye and holds her hand to her face with her mouth open as if looking at something of great interest or surprise.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Broker Notes

10 Aussie stocks to buy in FY 2026

Let's see which shares analysts think could be buys in the upcoming financial year.

Read more »

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing end to the trading week for investors this Friday.

Read more »

A young boy points and smiles as he eats fried chicken.
Share Gainers

3 ASX All Ords shares smashing the benchmark this week

Investors are sending these three ASX All Ords shares rocketing 18% to more than 29% this week. But why?

Read more »

watch
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Disappointed man with his head on his hand looking at a falling share price his a laptop.
Share Fallers

Why APA, Flight Centre, Reece, and Transurban shares are falling today

These shares are having a tough finish to the week. But why?

Read more »