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NEA

Nearmap Slowly Recover After Falling 29%

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

Nearmap’s (ASX: NEA) share price has recovered since the unfortunate downgrade, which resulted in a decline of 29% in its share price, a result from the loss of three clients and delay in the signing with a larger contract. If we were to compare the 1H FY19, Nearmap’s share price almost tripled, hitting a high of $4.29 before selling off more than 40% in the subsequent period. Although the fundamentals of the company haven’t changed its rapid expansion to the US market has proven to be a success with the company recording a 31% increase to its revenue to $46.3M and its 3D adoption technology is now used in a wider range of use cases.

NEACanberra-AU-3D

 

The company completed its first acquisition in 1H FY20 which highlights that the company is continuing to further advance its value proposition despite the increase in operating expenses by 61%, suggesting the company is using their investments for its US sales and marketing. Some analysts believe that this will be reflected in the second half of the reporting with Nearmap taking a conservative approach by tackling more mid-size transactions instead of the large sensitive deals.

As a growth stock, Nearmap has dominated the Australian market with its innovative aerial photography. The latest introduction of 3D and AI-based products can turn a series of Ariel imagery into datasets that customers could access and use effectively. This is a massive competitive advantage over rivals such as Aerometrex and with the most bullish analyst valuing Nearmap at AU$3.10, with another analyst giving it a bearish price at AU$2.10. The company’s guidance range for 2H FY2020 is to reach $110 million ACV, which some analysts say is very likely given that the company has an attractive valuation and business quality profile.


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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