The share price of Appen Ltd [ASX:APX] is down .89% today at time of writing, trading at $36.85.
You can see the APX share price went on a strong run from the March market lows:
Source: tradingview.com
In a 12-month window Appen shares are up more than 40%, we take a quick look at whether the run can continue.
APX share price may retrace
The APX share price reflects the broader theme in the market where tech leaders are advancing relative to their peers.
But the APX share price may begin a brief retracement as its P/E ratio now stands at a whopping 100-plus.
Even by tech stock standards this is quite high.
That being said, the Afterpay Ltd [ASX:APT] share price shows that you don’t even need an earnings multiple to surge up the charts.
But Appen is a different kettle of fish compared to the fintech darling.
It’s a kind of ‘AI infrastructure’ stock that feeds off the success of the Silicon Valley giants.
It’s growing company that has a dominant position in a niche market.
As such, its growth trajectory may be more bounded than APT.
Outlook for APX share price
With its next results due out in a couple weeks on 27 August, it will be very interesting to see whether the APX share price run was justified.
Expectations around APX are high.
You can see a glimpse of its financials and forward estimates below:
Source: MarketScreener
As you can see, things are projected to improve for the company across a number of balance sheet metrics.
Increasing net cash position and improving Return on Equity.
If the analysts are right about these things, the dividend pay-out ratio could improve over the coming years.
Of course, there are always risks, particularly in the tech world.
Competitors, or improving AI could mean the human leg work that APX provides may become less relevant.
For now, the outlook for the APX share price is strong if these numbers are anything to go by.
Regards,
Lachlann Tierney,
For Money Morning
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