The Nearmap Ltd (ASX: NEA) share price has declined by around 35% over the last month.
Tech shares are taking a bit of a beating right now. At the time of writing, the Afterpay Ltd (ASX: APT) share price is down 4.6%, the Zip Co Ltd (ASX: Z1P) share price is down 5.8% and the Xero Limited (ASX: XRO) share price is down around 2%.
Whilst Nearmap is currently down 4.2%, it just adds to the rest of the decline that the aerial imaging business has experienced.
Last week, the S&P/ASX 200 Index (ASX: XJO) rebalancing was announced – Nearmap is being removed from the index just before Christmas.
The heavy decline of the Nearmap share price started around the time that the company gave an update about FY22.
FY22 performance
Nearmap gave its update at the annual general meeting (AGM).
At the AGM, the company provided guidance that its annual contract value (ACV) was expected to end FY22 at between $150 million to $160 million on a constant currency basis.
Management said that the business had continued to deploy capital-raised funds in line with its FY22 guidance to increase investment in the business and use approximately $30 million of net cash in FY22.
Those funds are being allocated towards previously identified growth initiatives as it scales the business for growth.
Nearmap revealed that after a number of successfully completed tests of custom designed components in aerial flight, the company remains on track to manufacture and commence the roll-out of its next iteration of aerial camera systems, HyperCamera3 in FY22.
Outlook
Sometimes share prices, like the Nearmap share price, can be affected by what the company says about its future.
Nearmap said that it will continue to target ACV growth of between 20% to 40% in the medium-term to long-term and to maintain its underlying retention above 90%.
The company also said:
The combination of a healthy balance sheet and strong FY21 incremental ACV growth means Nearmap remains fully funded for the foreseeable future.
Optimistic expectations for the Nearmap share price
Two of the latest broker notes on Nearmap have price targets that are significantly higher than where it is today.
Citi has a price target of $2.20 on the business. At the time of the note release, it was 'neutral' on the business with thoughts that a legal battle in the US with Eagleview (part of the competition) could cost millions of dollars in legal fees.
Morgan Stanley rates the business as a buy with a price target of $3.20. That's more than double where Nearmap is trading at right now. The broker thinks Nearmap will deliver at least to expectations.
