This report is an updated version of the report published on 25 June 2025 at 11:15 AM AEST 

Appen Limited (ASX: APX)

Company Overview: Appen Limited (ASX: APX) specialises in providing data for the AI lifecycle, backed by over 28 years of expertise in data sourcing, annotation, and evaluation. With a diverse crowd of over 1 million skilled contractors fluent in more than 500 languages, the company enables organisations to develop innovative AI systems. Its comprehensive products and services instil confidence in leaders across technology, automotive, finance, retail, healthcare, and government sectors.

Recommendation Rationale – SELL at AUD 1.160

• Trading Around Resistance: APX’s share price is trading close to its R2 level recommended on 18 June 2025. Therefore, APX can face correction at the current levels.
• Technical Commentary: On the daily chart, APX’s stock prices broke above a symmetrical triangle pattern, indicating a positive bias. Moreover, the momentum oscillator RSI (14-period) is heading north from its midpoint, adding more support to the previous observation. Prices are trading between its previous peak and trough, which could serve as resistance and support levels for the stock, respectively.
• Reported Losses: For FY24, the company incurred statutory loss of USD 20 million. The company’s loss-making position presents a risk, as continued financial losses may strain resources, limit growth opportunities, and require additional funding or capital raising to sustain operations.

• Emerging Risks: Factors such as competition from niche and low-cost providers, customers choosing to do data annotation tasks in-house, and changing project profile may impact the company’s operations.

APX Daily Chart

Valuation Methodology: EV/Sales Relative Valuation Approach (FY Dec'25E) (Illustrative)

Considering the large technology clients in the US and China, positive net cash flow from operations, incorporating generative AI into its platforms for higher quality data delivery, the stock might trade at some premium to its peers. For valuation, few peers like Iress Ltd (ASX: IRE), Integrated Research Ltd (ASX: IRI), and Infomedia Ltd (ASX: IFM) have been considered.

Considering that the stock is trading near to its R2 level, macroeconomic uncertainty, rally in share price movement, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 1.16 (as of 25 June 2025, at 10:35 AM AEST).

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate. 

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 25 June 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.    

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice. 

Technical Indicators Defined: - 

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.