Australia Markets closed

Why the Appen share price could rocket higher on Monday

James Mickleboro
share price higher

The Appen Ltd (ASX: APX) share price could surge higher on Monday after the release of a positive announcement.

What did Appen announce?

This morning the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence announced an increase to its FY 2019 guidance.

Appen’s previous guidance range for underlying EBITDA was $85 million to $90 million. This compares to the underlying EBITDA of $71.3 million that it achieved in FY 2018.

Pleasingly, the company’s performance has been stronger than expected since its half year result.

In light of this, it now expects full year underlying EBITDA to be in the range of $96 million to $99 million. This implies year on year growth of 34.6% to 38.8%.

Furthermore, this forecast is based on a foreign exchange rate of A$1 to US$0.74 for November and December. Whereas at current exchange rates, management estimates that it could add a further $1 million to $1.5 million to underlying EBITDA.

What are the drivers of this upgrade?

The release explains that Appen’s improved FY 2019 earnings guidance is driven by increases in monthly relevance revenues and margins. This is largely from existing projects with existing customers.

Management has also reinforced its high conviction for the acquisition of the Figure Eight business. It confirmed its previous 2019 ARR guidance of $30 million to $35 million (at A$1=US$0.74).

As always, the company warned that its full year earnings are susceptible to upside or downside factors. These include the timing of work from major customers and Australian dollar fluctuations.

Also in the news on Monday has been fellow WAAAX member Altium Limited (ASX: ALU). The PCB design software company’s shares will be on watch after announcing the resignation of a key director. 

Ms Wendy Stops has resigned with immediate effect from the Altium board due largely to scheduling conflicts. Stops is also a board member of Commonwealth Bank of Australia (ASX: CBA) and Coles Group Ltd (ASX: COL).

The post Why the Appen share price could rocket higher on Monday appeared first on Motley Fool Australia.

NEW. The Best Value Growth Shares to Buy in 2020….

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.


More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium and Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019