Financial news wires are reporting that the share market analysts at Macquarie Group Ltd (ASX: MQG) are tipping the Nearmap Ltd (ASX: NEA) share price to hit $4.22 within the next 12 months.
Nearmap shares are already up around 800% over the past 5 years and may have some gas left in the tank if the Macquarie analysts are on the money.
This afternoon the shares are up 7% to a record high of $3.97 with investors betting that it will continue to grow sales of its aerial mapping software to U.S. businesses.
As Macquarie and other research houses such as Morgan Stanley have pointed out Nearmap boasts attractive economics as a business due to its recurring revenue subscription model that leads to high gross profit margins as once a business subscribes it has relatively little extra fixed costs on an ongoing basis.
The US market opportunity is also huge compared to Australia where Nearmap has already built a profitable business.
For the six months ending December 31 2018 Nearmap posted a profit before tax of $312,000 and has potentially many years of strong growth left in it. However, investors should remember that it comes with considerable risks and already has a lot of growth baked into its share price.
