It has been a disappointing year for the Nearmap Ltd (ASX: NEA) share price.
Since the start of 2021, the aerial imagery technology and location data company's shares have fallen 17%.
Is the Nearmap share price good value?
While the decline in the Nearmap share price this year is disappointing for shareholders, it could be a buying opportunity for non-shareholders.
That's the view of the team at Morgan Stanley, which are predicting some very strong returns for its shares over the next 12 months.
According to a recent note, the broker has an overweight rating and $3.20 price target on the company's shares.
Based on the current Nearmap share price of $1.88, this implies staggering potential upside of 70% over the next 12 months.
Why is the broker bullish on Nearmap?
Morgan Stanley believes that Nearmap's shares are undervalued based on its growth potential.
The broker feels the company is well-positioned for growth and suspects it could achieve $200 million in annual contract value (ACV) within the next 12 months. This compares to FY 2021's ACV of $128.2 million. In addition, the broker is expecting gross margin improvements and lower cash burn.
It feels that if the company achieves this, the Nearmap share price will rerate significantly.
Another positive in the broker's eyes is management's decision to transition from selling images to selling insights. Morgan Stanley suspects that this could lead to better customer engagement and support retention rates.
Overall, the broker believes the Nearmap share price is very good value for investors and is looking forward to the release of a trading update at its annual general meeting in November.
Shareholders will no doubt be hoping that meeting is an inflection point for Nearmap's shares.
