In a report released today, Derrick Wood from TD Cowen maintained a Hold rating on Appian (APPN – Research Report), with a price target of $43.00.
Derrick Wood has given his Hold rating due to a combination of factors that influence Appian’s current market position and future prospects. The management team addressed concerns about the company’s exposure to federal contracts, which make up a significant portion of its revenue. They emphasized the mission-critical nature of Appian’s offerings and the defensibility of its app-based pricing model for government clients. This pricing strategy is seen as a strength, as it is less vulnerable to reductions in seat count by agencies.
Additionally, while there is strong interest in Appian’s AI capabilities, the path to monetization is still in its early stages. The company is focusing on proving the value of its AI offerings before fully capitalizing on them. Furthermore, Appian’s recent go-to-market strategy shifts, including a focus on larger deals and strategic partnerships, show promise but are still in transition. These factors combined suggest a cautious approach, justifying the Hold rating as the company navigates these opportunities and challenges.