The Nearmap (ASX:NEA) share price has dived 35% in a month. What now?

Nearmap shares have suffered, but what could happen next?

| More on:
Sad investor watching the financial stock market crash on his laptop computer.

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 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.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Nearmap Ltd., Xero, and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, Nearmap Ltd., and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Five happy friends on their phones.
Share Market News

Goldman Sachs says these ASX tech stocks can rise 18% to 30%

The broker sees big returns on offer from these shares.

Read more »

A guy helps a girl lift a couch, both are laughing.
Technology Shares

3 of the best ASX tech shares to buy and hold until 2030

I think these stocks have exciting futures.

Read more »

A young woman uses a laptop and calculator while working from home.
Technology Shares

If I'd put $5,000 in Block shares 5 months ago, here's what I'd have now

Was it a good idea to invest in this payments stock five months ago?

Read more »

Close up of a sad young woman reading about declining share price on her phone.
Technology Shares

Why is the Brainchip share price sinking over 7% today?

What's going on with this tech stock on Wednesday?

Read more »

woman working on tablet
Technology Shares

Missed out on Nvidia? My best ASX tech stock to buy and hold

Do you have FOMO after the US chip maker's share price rocketed? Here's an Aussie company worth backing instead.

Read more »

Three businesspeople leap high with the CBD in the background.
Technology Shares

Guess which ASX small-cap stock is rocketing 45% on 'pivotal moment'

Investors have responded very positively to an announcement.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »