Appen had a conference call regarding their latest update. They got really defensive on revenue growth etc... Especially when it came to how their top 5 customers (Comprising 88% of revenue) have reprioritised their data-intensive projects to other projects concerning vertical integration. They believe it is a "near-term" headwind and those customers will continue with previous projects after Covid.
Their growth plans with the government took a massive hit (pandemic of course) and halted the sales growth there. They are very optimistic about autonomous driving technology and are labelling data on test cars across race tracks.
The market belted the company on reducing the guidance estimates. However, the market is not looking at the longer-term picture with autonomous driving. Tesla will lead and vertically integrate but other car companies will use third party tech for their autonomous vehicle. Appen can be part of the third party tech. Comma Ai is used extensively across GM fleet, as well as Luminar for Volkswagen. Appen should sign up deals with companies like Comma Ai who have the data so that they can label the training data as Comma Ai does not have a large workforce.
I do not know how far away they are with customers in the self-driving space and that was going to be my question on the conference call. The interpreter cut me out lol, most of the wall street guys talking about how it impacts EBITDA for 2HFY20 is not forward-looking. Plus, Appen puts it out there that it will decrease.
What the crisis has told Appen is to diversify your customer base. Autonomous cars are the way, it will have to most data in the next 5 years. The miles driven by Tesla is just a barometer of how big the market can grow. Other car companies are not that sophisticated and do catalogue engineering.
Just saw Dino's straw (WOW) Scale AI already in the space and doing data labelling for autonomous driving cars. Ok, I spoke too soon, competition is big and Scale has the lead. In saying that, more than 1 company could label the data. The datasets are massive.
We have seen brokers downgrading the stock except for Citi maintaining a price target greater than $30. I took broker data from 28/8/20 to 16/4/21 to see the downward trend.
The average broker price target on 28/8/20 -> $36.40
The average broker price target on 16/4/21 -> $22.23
The brokers from the chart : Citi, Credit Suisse, Macquarie, Ord Minnett, UBS (taken from FNArena). I couldn't find Mograns or Morgan Stanley.
The share price fall is positively correlated with average broker price target price.
The question remains whether changes in broker ratings are good indicators? From the limited data I took, broker estimates suggest lagging indicators to the actual share price movement. By the time a broker update come out, the market has already made up it's mind.
Dear Ninfy ol boy, for what it is worth, lastest broker reported on matters associated with Appen is as following:
As of Friday gone, Citi has made a bold call on Friday, rating the Appen share price as a buy with a $30.90 target price. This represents an upside of approximately 82% from its current level of $16.97.
hope this helps
I was at one stage providing broker reports, but, but, but, they were not well received and thus, stopped on backlash of such provisions of information. Agree the broker report(s) has some form of value in a number of areas, although at times (commissioned) to be taken with a grain of salt from folks such as Bell Potter for example. All in my own humble opinion of course which is next to meaningless.
initiating broker report as a dedicated depository would significantly add value and/or readily accessed informed information on matters associated with third part assessment(s).