The Nearmap Ltd (ASX: NEA) share price has been out of form over the last 12 months.
Since this time last year, the aerial imagery technology and location data company's shares have lost 30% of their value.
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Is the weakness in the Nearmap share price a buying opportunity for investors?
According to a recent note out of Morgan Stanley, its analysts were pleased with the company's results in FY 2021.
In response, the broker retained its overweight rating and $3.20 price target.
Based on the latest Nearmap share price of $2.16, this implies potential upside of 48% over the next 12 months.
What happened in FY 2021?
Nearmap was on form in FY 2021 thanks largely to a record performance by its North American operations. For the 12 months ended 30 June, Nearmap delivered a 26% increase in annual contract value (ACV) to $128.2 million.
This was underpinned by incremental ACV growth of $21.8 million (or $27.4 million in constant currency), which was driven by a combination of growth in subscriptions and its average revenue per subscription metric.
Another positive from the result was the narrowing of Nearmap's loss. Thanks to operating leverage, the company recorded a loss after tax of $18.8 million for the year. This was almost half the $36.7 million loss it recorded in FY 2020. This left the company with a cash balance of $123.4 million at the end of the period.
And while no guidance was given with its results, management spoke positively about the future. Nearmap's Chief Financial Officer, Andy Watt, commented: "Our track record of successfully executing on our growth initiatives gives me the confidence we can successfully capitalise on the strong momentum in our business into FY22 and beyond."
What did the broker say?
Morgan Stanley highlights that this FY 2021 result was in line with guidance.
And while it notes that no guidance was provided for FY 2022, the broker is confident on its prospects and is expecting its cash burn to reduce.
Its analysts also remain confident that the Nearmap share price could re-rate to higher multiples in the near future once further clarity is gained for its ACV growth and operating leverage.
In light of this, it believes the Nearmap share price is trading at a very attractive level currently.
