Appen’s first half FY21 earnings of $28m declined 14% on the previous period and was a -25% miss to Credit Suisse driven by misses at both sales and margin.
Credit Suisse notes management provided a more credible bridge to the large second-half skew required to achieve full-year guidance than last year, namely the strength of the order book, a high-quality sales pipeline, and closer discussions with customers during the year.
The broker also notes the second half FY21 bridge to profit guidance suggests a half-on-half doubling of profit and estimates $61m of incremental second half FY21 revenue is required to achieve guidance.
Neutral rating is unchanged and the target is lowered to $11 from $15.
Sector: Software & Services.
Target price is $11.00.Current Price is $10.86. Difference: $0.14 – (brackets indicate current price is over target). If APX meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
