In a report released today, Sanjit Singh from Morgan Stanley maintained a Hold rating on Appian (APPN – Research Report), with a price target of $35.00.
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Sanjit Singh’s rating is based on a combination of factors that reflect both positive and cautious outlooks for Appian. The company’s Q4 performance showed strong results across key metrics, including a notable increase in revenue driven by robust on-premise orders from the Public Sector Vertical. However, Singh notes that while profitability is improving, with EBITDA margins increasing significantly year-over-year, the growth in cloud revenue is slowing, which aligns with trends seen among other infrastructure software peers.
Sanjit Singh also highlights the improving unit economics, with gross margins rising despite a larger mix of cloud revenue, indicating a shift towards software over professional services. Despite these positive signs, Singh maintains a Hold rating as the valuation appears reasonable given the current revenue growth profile and operating margins. The outlook for FY25 suggests a cautious approach, especially concerning the US federal business, which contributes significantly to total revenue. Singh suggests waiting for better growth prospects before considering a more aggressive stance on the stock.
Based on the recent corporate insider activity of 53 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of APPN in relation to earlier this year.