Macquarie forecasts Appen shares to crash a further 47%

One leading broker is raising the red flag and warning investors off this struggling tech share.

| More on:
A business woman looks unhappy while she flies a red flag at her laptop.

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

I think it is safe to say that it has been a week to forget for Appen Ltd (ASX: APX) shares.

Since this time last week, the artificial intelligence data services company's shares have fallen over 28%.

This means that Appen shares are now down 65% over the last 12 months.

And just when you thought it was safe to go back into the water, one leading broker is warning investors that there could still be even more declines to come.

Appen shares tipped to sink and sink some more

According to a note out of Macquarie, its analysts have downgraded Appen's shares and taken an axe to their valuation.

The note reveals that Macquarie has downgraded the struggling tech share to an underperform rating and cut its price target by more than half to a lowly $1.18.

Based on the current Appen share price of $2.21, this implies potential downside of almost 47% for investors over the next 12 months.

It also suggests that the whole of Appen is only worth in the region of $150 million. A far cry from its multi-billion dollar market capitalisation a few years ago.

Macquarie has concerns that its poor performance will continue for some time to come, putting pressure on its cash flow and balance sheet.

Thankfully, with the company having no debt, it sees a capital raising as a moderate risk. However, it certainly is possible given how things are going.

Elsewhere, analysts at Morgan Stanley are also feeling bearish. The broker has retained its underweight rating and cut its price target to $2.00.

Morgan Stanley appears concerned how Appen will be able to drive revenue growth while also cutting its costs markedly. All in all, the broker appears to believe investors should stay away until the company has proven its business model.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Appen. 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.

More on Technology Shares

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

Guess which ASX All Ords share is rocketing 16% on an asset sale

This share is catching the eye with a very big gain on Friday. But why is it rising?

Read more »

a man clasps his hand to his forehead as he looks down at his phone and grimaces with a pained expression on his face as he watches the Pilbara Minerals share price continue to fall
Technology Shares

Why are Megaport shares sinking 14% on Friday?

Why are investors hitting the sell button? Let's find out.

Read more »

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Why today is a big day for this ASX 200 AI stock

This company stands to benefit from 'one of the most profound transformations in the history of technology'.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Technology Shares

Why are WiseTech Global shares crashing almost 20% today?

Recent controversy has led to delays to an important launch and hit its revenues.

Read more »

Woman with speaker
Technology Shares

After falling 62%, this leading ASX 200 share could be gearing up for growth!

This industry-leading company looks like a turnaround opportunity to me.

Read more »

A man has computer-generated images rushing through his head indicating an AI (Artificial Intelligence) concept of a communication network.
Technology Shares

ASX investors are obsessed with Nvidia shares! Here's why

The global chipmaker reported a 94% increase in annual revenue in the third quarter.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

Own WiseTech shares? Here's what to watch at Friday's AGM

This could be one of the major events of the year.

Read more »

Woman and man calculating a dividend yield.
Technology Shares

This ASX tech stock is down 93% from its highs. Could Trump tariffs give it a boost?

The ASX tech stock could enjoy tailwinds from Trump’s threatened tariffs.

Read more »