Appen share price (ASX:APX) up 6% ahead of earnings this week

Let's take a closer look.

| More on:
share price gaining

Image source: Getty Images

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 Appen Ltd (ASX: APX) share price has walked through the session in the green during trade on Monday.

Appen shares are on the move ahead of the artificial intelligence (AI) company's earnings report due on Thursday.

Let's investigate further.

A bit more on Appen

Appen is a "global leader" in human annotated training data for machine learning and AI. It has two main segments, content relevance and speech collection.

Its language technology is used in over 150 languages and dialects by technology companies and various governments.

Appen has a market capitalisation of $1.47 billion at the time of writing.

What's behind the Appen share price ahead of its earnings report?

Over the last week, Appen shares have gathered momentum on the charts, climbing from lows of $11.32 on 17 August.

There has been no market-sensitive information by the company over this time. However, investment bank Citi holds an $18 per share price target on Appen shares.

The broker feels that, because many of Appen's large customers have recognised an accelerated growth period in revenue this year, Appen is well-positioned to benefit from this.

On this note, given the market's reaction to Appen's FY20 earnings report back in February, it may be that investors are seeing the strengths of its end-markets as a plus for the Appen share price.

What else?

As such, investors may be banking on an earnings surprise in its report on Thursday, where it would beat guidance on revenue, EBITDA and/or net profit after tax (NPAT).

An earnings beat is typically associated with positive sentiment, and investors may be seeking to enter a position early in order to capture any upward movements in the Appen share price post-earnings.

To illustrate, recall that after its last earnings report in February, the Appen share price sunk 7% on the day it was released. That's despite the fact the company grew revenues by 12% and EBITDA by 8% over the year.

However, management downgraded guidance in the report and then subsequently again in May. Thus, Appen shares have faced selling pressure over the last few months.

For instance, in May, the company forecasted an EBITDA range of US$83–$90 million, down from US$120–$130 million in its FY20 report.

However, even this figure signifies an 18%–28% year on year growth pattern from the year prior.

Therefore, without any additional news related catalysts, it therefore stands to reason that investors may be pushing the Appen share price higher in anticipation of a strong performance in its FY21 half year results on Thursday.

Appen share price snapshot

Appen shares have posted a year to date loss of 48%, extending the previous 12 month's loss of 68%.

Despite this, Appen shares are up 9.4% over the last week. Further, they are around 2% in the green over the last month.

These results have lagged the S&P/ASX 200 Index (ASX: XJO)'s return of around 25% over the past year.

As mentioned, investors can expect the company's FY21 half year earnings report on Thursday. Remember, this may be subject to change, so keep an eye out.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen 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 Gainers

Excited group of friends sitting on sofa watching sports on TV and celebrating.
Share Gainers

Why Boss Energy, Neuren, Strickland, and Vulcan shares are pushing higher today

These shares are having a better day than most today. But why?

Read more »

Woman holding gold bar and cheering.
Gold

Up 200% in 2025, guess which ASX gold stock is surging 11% again today

Investors are sending the ASX gold stock soaring again today. But why?

Read more »

Man with backpack spreading his arms out and soaking in the sun.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a volatile start to the week for the ASX share market...

Read more »

Rising share price chart.
Share Gainers

Why Canyon Resources, Nufarm, Paladin Energy, and WiseTech shares are charging higher today

These shares are starting the week on a positive note. But why?

Read more »

Man with rocket wings which have flames coming out of them.
Gold

Guess which ASX gold stock just rocketed 167% on big news!

Investors are sending the ASX gold stock flying higher on Monday. Let’s find out why.

Read more »

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

Up 34% since April, ASX 300 healthcare stock lifts off again today on new milestone

The ASX 300 healthcare stock has been on a tear since hitting one-year lows in April.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares finished the trading week on a high this Friday.

Read more »

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »