The Nearmap (ASX:NEA) share price has dived 35% in a month. What now?

Nearmap shares have suffered, but what could happen next?

| More on:
Sad investor watching the financial stock market crash on his laptop computer.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Nearmap Ltd (ASX: NEA) share price has declined by around 35% over the last month.

Tech shares are taking a bit of a beating right now. At the time of writing, the Afterpay Ltd (ASX: APT) share price is down 4.6%, the Zip Co Ltd (ASX: Z1P) share price is down 5.8% and the Xero Limited (ASX: XRO) share price is down around 2%.

Whilst Nearmap is currently down 4.2%, it just adds to the rest of the decline that the aerial imaging business has experienced.

Last week, the S&P/ASX 200 Index (ASX: XJO) rebalancing was announced – Nearmap is being removed from the index just before Christmas.

The heavy decline of the Nearmap share price started around the time that the company gave an update about FY22.

FY22 performance

Nearmap gave its update at the annual general meeting (AGM).

At the AGM, the company provided guidance that its annual contract value (ACV) was expected to end FY22 at between $150 million to $160 million on a constant currency basis.

Management said that the business had continued to deploy capital-raised funds in line with its FY22 guidance to increase investment in the business and use approximately $30 million of net cash in FY22.

Those funds are being allocated towards previously identified growth initiatives as it scales the business for growth.

Nearmap revealed that after a number of successfully completed tests of custom designed components in aerial flight, the company remains on track to manufacture and commence the roll-out of its next iteration of aerial camera systems, HyperCamera3 in FY22.

Outlook

Sometimes share prices, like the Nearmap share price, can be affected by what the company says about its future.

Nearmap said that it will continue to target ACV growth of between 20% to 40% in the medium-term to long-term and to maintain its underlying retention above 90%.

The company also said:

The combination of a healthy balance sheet and strong FY21 incremental ACV growth means Nearmap remains fully funded for the foreseeable future.

Optimistic expectations for the Nearmap share price

Two of the latest broker notes on Nearmap have price targets that are significantly higher than where it is today.

Citi has a price target of $2.20 on the business. At the time of the note release, it was 'neutral' on the business with thoughts that a legal battle in the US with Eagleview (part of the competition) could cost millions of dollars in legal fees.

Morgan Stanley rates the business as a buy with a price target of $3.20. That's more than double where Nearmap is trading at right now. The broker thinks Nearmap will deliver at least to expectations.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Nearmap Ltd., Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, Nearmap Ltd., and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

group of traders cheering at stock market
Technology Shares

Codan shares near an all time high. Can they go higher?

Is there more room for growth for this ASX 200 company? 

Read more »

Kid putting a coin in a piggy bank.
Technology Shares

Why I think this ASX small-cap stock is a bargain at $4.41

This tech business has a lot going for it.

Read more »

The last piece of the jigsaw being fitted, indicating good news for a share price on merger or acquisition
Mergers & Acquisitions

WiseTech share price storms higher on $3.25b blockbuster acquisition

What is the company spending billions on? Let's find out.

Read more »

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »

Happy work colleagues give each other a fist pump.
Technology Shares

Guess which ASX 200 technology stock has outperformed Nvidia over the past 5 years?

This company has been nothing short of impressive.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Technology Shares

After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie?

Valuations matter when investing, and Macquarie feels no different.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Technology Shares

Why Goldman Sachs rates this ASX tech share as a top buy

Let's see why the broker rates this stock highly right now.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

WiseTech shares have surged 34% since April. Is it too late to buy?

Can WiseTech shares keep charging higher? Here’s what this investing expert expects.

Read more »