What happened

Shares of low-code software development platform Appian (NASDAQ:APPN) fell as much as 17.5% on Monday, following a downgraded rating for the stock by an analyst at Barclays (via StreetInsider.com).

Barclays analyst Raimo Lenschow downgraded the stock from equalweight to underweight, or a rating in which an analyst believes a stock has a below-average chance of performing in line with stock market indices. His lower rating for the stock reflects valuations concerns.

A chalkboard sketch of a downward trending chart.

Image source: Getty Images.

So what

Appian is "the most expensive" stock among those he covers, Lenschow said. Lenschow noted that aggressive buying of Appian stock by active investor Abdiel Capital has driven the price to a level beyond the stock's intrinsic value.

The stock is up 74% since Dec. 15, 2017, trading at $36.35. Lenschow has a 12-month price target for the stock of $26, or nearly 28% below current levels.

Now what

Lenschow seems to be bullish on Appian's underlying business, commenting on the strong market opportunity for low-code software and management's "healthy execution." Appian's total revenue rose 45% year over year in the company's most recent quarter, supporting Lenschow's bullish view on the underlying business.

But investors may want to consider whether Appian's valuation has gotten ahead of itself.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.