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.
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.
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.