The Nearmap Ltd (ASX: NEA) share price was out of form on Monday despite a decent recovery in the tech sector.
The aerial imagery technology and location data company's shares ended the day 3% lower at $1.69. This compares to a 0.4% gain by the S&P/ASX All Technology Index (ASX: XTX).
This latest decline means the Nearmap share price is now down almost 50% from its high.
Why did the Nearmap share price tumble?
As well as being forced to explain the disclosure of its US legal battle by the Australian share market regulator (you can read that here), a broker note also appears to have been weighing on its shares.
This morning analysts at Citi responded to the aforementioned legal battle and made a change to their recommendation.
According to the note, the broker has downgraded the company's shares to a neutral (high risk) rating and cut the price target on them by 37% to $2.00.
Based on the current Nearmap share price, this implies potential upside of 18% over the next 12 months. While this is a solid potential return, it is still notably lower than where its shares were trading immediately prior to the litigation announcement.
What did Citi say?
Citi has concerns that the litigation could negatively impact demand in the United States, which could in turn weigh on the Nearmap share price.
Citi commented: "While Nearmap is confident that it can successfully defend against Eagleview's allegations of patent infringement and in our view, Nearmap can still be successful in the US even if it were to lose the lawsuit, we downgrade to Neutral/High Risk as we expect the legal proceedings will likely have a negative impact on demand in the US and this uncertainty could weigh on the share price. New target price is $2.00 (-37%)."
