Nearmap (ASX:NEA) share price hit by broker downgrade

The Nearmap Ltd (ASX:NEA) share price was out of form on Monday after being downgraded by a leading broker. Here's what happened…

| More on:
An ASX investor looks devastated as he watches his computer screen, indicating bad news

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 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%)."

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Broker looking at the share price.
Broker Notes

Top brokers name 3 ASX shares to buy today

Here's what brokers are recommending as buys this week.

Read more »

A young man talks tech on his phone while looking at a laptop. A financial graph is superimposed across the image.
Broker Notes

Guess which ASX 200 share offers 12% upside and a 4% dividend yield

Bell Potter just slapped a buy rating on this stock.

Read more »

A man leaps from a stack of gold coins to the next, each one higher than the last.
Broker Notes

Qantas or Telstra share price: Which will climb higher in 2024?

Let's see what top broker Goldman Sachs has to say about these ASX blue-chip stocks.

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Small Cap Shares

3 small-cap ASX shares with 'long runways for growth'

DNR's Sam Twidale reckons investors could do worse than buy these guys for the long run.

Read more »

Woman using laptop for job search
Investing Strategies

2 ASX 200 shares to buy for 'strong growth' at decent prices right now

Searching for a bargain? Here's a pair that Catapult's Dylan Evans has his eyes on at the moment.

Read more »

A Paladin Energy miner wearing a hard hat and protective gear stands in front of a large mining truck and smiles to the camera.
Energy Shares

Uranium is set to boom, and this is the 'premium' ASX stock to buy

Shaw and Partners' Jed Richards reckons these are the shares to buy for the nuclear energy theme.

Read more »

female in hard hat crosses fingers
Investing Strategies

The ASX 200 stock that could get second time lucky

These shares have failed to impress in 2024, but many experts believe it's a bargain buy.

Read more »