It certainly has been an eventful year for the Nearmap Ltd (ASX: NEA) share price.
The aerial imagery technology and location data company's shares have had a number of ups and downs.
Unfortunately, though, the downs have been dominating in recent weeks, leading to its shares trading 21% lower year to date.
Image source: Getty Images
Is this a buying opportunity for investors?
According to a note out of Morgan Stanley this morning, its analysts believe the recent weakness in the Nearmap share price is a buying opportunity.
The note reveals that its analysts have retained their overweight rating and $3.20 price target on the company's shares.
Based on the current Nearmap share price of $1.81, this implies potential upside of approximately 77% over the next 12 months.
Why is Morgan Stanley remaining bullish?
Morgan Stanley notes that Nearmap's management is confident it can deliver positive jaws in FY 2022. It is expecting to grow annual contract value (ACV), revenue, and cash receipts all quicker than its costs during the year.
This is a big positive given the company's history of increasing costs and cash burn.
In addition to this, the broker was pleased with the extra clarity the company has provided in relation to its legal issues.
It notes that Eagleview's patent infringement claim relates to roof-management techniques and not all elements of its product. Positively, this part of its offering accounts for less than a quarter of its US business.
Another positive that Morgan Stanley has highlighted is that the company has not experienced any material sales impacts because of the claim. This was a concern that many analysts had when the legal action was first announced.
Is anyone else positive on the Nearmap share price?
Morgan Stanley isn't the only broker that believes the Nearmap share price can go higher from here.
While analysts at Citi currently only have a neutral rating on its shares, their price target of $2.00 implies potential upside of 10.5%.
Citi explained its view: "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%)."
