Appen Shares Drop After Citi Downgrades Stock on Guidance Risk

By Stuart Condie

SYDNEY--Appen Ltd.'s shares slumped close to a five-year low after Citi analysts downgraded the stock on risk that the data annotation company could miss its annual earnings guidance.

The Citi analysts cut their recommendation to neutral from buy, following the Australian company's weaker-than-expected start to 2022, which leaves it needing a strong second half.

"Appen management noted that... the weakness was primarily due to one customer, which we see as likely being Facebook based on our website visit analysis," the analysts said in a note.

Appen's shares are down 4.2% at A$6.13 after earlier hitting A$6.09. The stock, which was worth as much as A$43.50 in August 2020, touched an intraday low of A$6.08 in February, which was its lowest since November 2017.

Citi's team also said in a note that Canadian tech company Telus International (Cda) Inc.'s takeover bid for Appen last month showed that demand for human-labeled artificial-intelligence training data still exists.

Telus later withdrew its A$9.50-a-share bid, which valued Appen's equity at 1.17 billion Australian dollars (US$843.2 million), after the takeover proposal was made public.

Citi's analysts slash their target price for the stock by 28% to A$6.60, but added that Appen remains attractive given its market position.

Write to Stuart Condie at [e-mail]

(END) Dow Jones Newswires

June 05, 2022 23:45 ET (03:45 GMT)

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