Appian (NASDAQ:APPN) have been given a consensus average recommendation of “Hold” from eleven brokerages presently covering the company. Seven of the research analysts rated the stock with a hold rating whereas three have given “buy” rating to the company. Also, the share prices of the software developer rose to around 10% recently.
Prior to this rise, the stock of the company dropped sharply in response to downgrades by a pair of analysts. The first downgrade was given by analyst at Barclays followed by Raimo Lenschow who lowered his rating on the shares shifting from equalweight to underweight due to valuation concerns. According to Raimo, a big investment firm called Abdiel Capital aggressively started buying Appian’s shares.
That is why there was a sudden increase in the share prices of the company. Raimo’s evaluation is bullish for the Appian’s stocks and he believes that the shares of the company are currently overvalued. Another blow came from SunTrust Banks, Inc. (NYSE:STI). Robinson Humphrey from the bank downgraded the stock from hold to buy saying that the stocks of Appian showed significant stock appreciation.
These downgrades knocked down the stock of the company by more than 20% during the trading sessions a few days ago. However, the recent jump is more likely being caused by the eager and opportunistic investors who want to take advantage of the availability of the momentum stock at a discount.
Appian’s Shares Trading At More Than 13 Times Sales
The stock of the company rose by 72% last month and as of now, the shares are trading at more than 13 times sales. That is why a few Wall Street analysts are thinking that the share prices have just gotten ahead of it. However, the quarterly results of the company provide an insight as to why the shares are spiking ahead of the speculations.
The revenue of the company is growing quickly. The subscription revenue retention rate has remained well above 100% and the net loss of the company is falling drastically. Also, recently the company added another $76 million to its debt-free balance sheet. That is why financing those losses continuously is not going to be a big deal for Appian.