Why the Nearmap share price is charting higher today

Posted: 5 May 2021 1:02 pm
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Shares in the aerial imagery company Nearmap have surged nearly 60% over the past year, underlining its growth potential.

Shares in Nearmap (ASX: NEA) have hit their highest level in 3 months with the stock surging more than 15% to $2.40 at the time of writing. Already, nearly 3 million shares have traded hands, surging past the stock’s 30-day average.

Why the Nearmap stock price is up

The Sydney-based location data company released a trading update on Tuesday afternoon.

Nearmap, which markets high-resolution aerial imagery for most of Australia, New Zealand and the United States, upgraded its annual contract value (ACV) guidance for FY21 to $128-$132 million, an improvement from the previous estimate of $120-$128 million.

It also expects net cash flow to be less than $10 million this financial year. Meanwhile, CEO Rob Newman says the development of the HyperCamera3 product is on track for the FY22 launch and expects to deliver 20-40% ACV growth from FY22 onwards.

Nearmap attributed the upgrade to the momentum seen in the first half continuing, with growth across its core industry verticals from both new and existing customers.

The technology provider says this reinforces the attractiveness of its subscription business model and will give it a significant competitive advantage.

Analyst Upgrades

Analysts seem to agree, and a spate of favourable commentary has followed the company’s announcement.

Morgan Stanley analysts said the continued US execution was a key feature, also noting that the upgrade had come even before the seasonal June peak, “implying confidence and de-risking the FY22e growth profile". They upgraded the 12-month price target to $3.20 a share and kept their "overweight" rating on the stock.

RBC Capital Markets analysts, who have a $3.10 price target and an "outperform" rating on the stock, said the cash flow numbers had been “better than expected”.

Before Wednesday’s surge, Nearmap shares were down 7% so far this year. But over the last 12 months, the stock is up nearly 60%. Investors will be hoping that momentum continues.

Considering buying Nearmap shares?

If you are keen to buy Nearmap shares, you should consider investing through an online share trading platform.

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