Stock Market

Trade of the Day: An Insider Buy for Appian (APPN) Stock Points to a Reversal

Source: JHVEPhoto / Shutterstock.com

Insiders sell for a variety of reasons, many of them mundane. However, they only buy for one reason: They believe shares will swing higher in value. With that principle in mind, infrastructure software specialist Appian (NASDAQ:APPN) appears to be a compelling opportunity. Not only did a major investor place a big bet on APPN stock, it appears fundamentally undervalued.

According to its public profile, Appian provides a low-code design platform, encompassing artificial intelligence, process automation, data fabric and process mining.

Essentially, low code refers to the ability to create a logical process or framework without much knowledge of computer programming. Solutions like Appian do the heavy lifting of “manual” coding, enabling enterprises to bring concepts to market faster.

As you might imagine, there’s huge demand for such offerings. According to Mordor Intelligence, the low-code development platform market reached a valuation of $16.17 billion in 2024. By 2029, this sector could be worth $62.15 billion, implying a compound annual growth rate (CAGR) of 30.9%.

Just from the underlying potentiality, APPN stock is worth a closer examination.

Insider Buys and Discounted Valuations

Between July 5 and July 9, Abdiel Capital Advisors – one of the top investors of APPN stock – acquired a significant number of shares in the software enterprise. According to disclosures filed with the U.S. Securities and Exchange Commission (SEC), the purchase price ranged between $30.94 and $31.48.

Another factor that helps drive the narrative forward for APPN stock is the value proposition. Right now, shares trade hands at 4.2x trailing-year sales. According to Gurufocus, the median sales multiple for the underlying software industry sits at 2.25x. Therefore, it’s not exactly trading at a discount.

Still, keep in mind that not all software companies are aligned with an industry featuring an expected CAGR of 31%. Further, data from Yahoo Finance reveals that between the first quarter of 2023 to Q1 2024, the average sales multiple stood at 6.21x. In that sense, APPN stock is undervalued.

Even better, analysts project that revenue could hit $615.69 million by year’s end. If so, that would imply a growth rate of 12.9% from last year’s tally of $545.36 million. Therefore, it’s quite possible that APPN stock could grow into its prior valuation.

Enticingly, analysts rate Appian a consensus moderate buy with an average price target of $37.50 over the next 12 months.

Trade of the Day: Buy APPN Stock

For today’s Trade of the Day, it’s a straightforward idea: Buy APPN stock in the open market.

Looking at the situation close up, it appears that Appian charted a bullish morning doji star pattern between June 17 and June 20. This pattern was basically confirmed through APPN’s strong rally to the point where it stands now.

Source: Chart by TradingView

Moving forward, it’s important for shares to punch above the $32 level. This line represents long-term support. Coincidentally, the consensus analyst price target of $37.50 roughly aligns with the upside resistance level of around $38. In other words, APPN stock is sandwiched between these two thresholds.

Thanks to the combination of insider acquisitions, a compelling valuation and supportive fundamentals, the technicals should cooperate. Speculators may be able to ride this idea for a 19% lift before reexamining the bullish case at $38.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

Source link

Share with your friends!

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign up now for breaking stock alerts

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.