Nearmap share price up 6,460% post-IPO as it moves into ASX200

The Nearmap Ltd (ASX: NEA) share price looks set to climb higher as it will replace MYOB Limited (ASX: MYO) in the S&P/ASX200 Index (ASX: XJO) following the latter’s acquisition by KKR.

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The Nearmap Ltd (ASX: NEA) share price looks set to climb higher as it will replace MYOB Group Ltd (ASX: MYO) in the S&P/ASX200 Index (ASX: XJO) following the latter’s acquisition by KKR.

What did MYOB announce to the market?

S&P Dow Jones Indices announced that it will remove MYOB from the S&P/ASX200, subject to shareholder and final court approval of the scheme of arrangement whereby the company will be acquired by KKR & Co Inc.

S&P Dow Jones will remove MYOB from the index effective after the close of trading on 24 April 2019. MYOB will be replaced by Nearmap Ltd in the S&P/ASX200 after this date.

What’s happening with KKR’s MYOB acquisition?

The MYOB share price is currently trading at $3.39 per share and is unlikely to change given KKR’s proposed price of $3.40 per share.

KKR had initially offered $3.70 per share for MYOB in October 2018, then increased to $3.77 per share which caused the MYOB Board to allow the private equity firm to conduct its due diligence on the software firm.

However, the Q4 2018 global equities market crash scuppered those plans and saw KKR revise its offer to $3.40 per share.

Is Nearmap in the buy zone?

Nearmap has proven to be one of the real success stories on the ASX in recent years and is up 6,460% on its IPO offer price of $0.05 per share.

The geospatial mapping technology company is currently trading at $3.28 per share and has more than doubled in value since the start of the year.

I’m quite bullish on Nearmap’s growth prospects and don’t see any reason why it couldn’t continue to rocket higher in 2019 and beyond.

The company reported strong half-year earnings in February highlighted by 46% year-on-year revenue growth and its net loss after tax reduced by 70% to $1.97 million.

Nearmap also reported reduced churn from 9% to 6% and should continue to see annualised contract value (ACV) trend higher when it reports its full-year results in August this year.

For those who want to find the next hot growth company, this top-rated stock could boost portfolio gains as it continues to soar in a $22 billion industry.

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Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of MYOB Group Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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