The Nearmap Ltd (ASX: NEA) share price has climbed 3.5% this morning, currently trading at $2.07.
This follows a broker upgrade on the aerial imagery provider from RBC Capital Markets.
What did the broker say?
As noted by the Australian Financial Review, RBC Capital Markets has upgraded its view on Nearmap shares from ‘sector perform’ to ‘outperform’.
According to the broker:
We believe Nearmap is on track to print improved customer churn numbers at its February 2021 result… Improved churn demonstrates the product suite resonates with customers and has been resilient in a COVID environment.
RBC Capital highlighted that with a $100 million in net cash, Nearmap’s cash position is strong. And the broker forecasts that customer churn will fall from 9.9% as at the end of June 2020 down to a 7–8% range.
The broker is also unconcerned over the impact of a rising Aussie dollar, which has gained 10% against the greenback in the last 6 months:
The US is approaching around 40 per cent of annualised contract value (ACV), which is a headwind at the ACV line but assists at an earnings perspective as the US is loss-making while the ANZ business is profitable.
Nearmap share price and company snapshot
Nearmap provides high resolution aerial imagery technology and location data for companies and government customers across Australia, the United States, Canada and New Zealand. Its technology allows customers to conduct detailed virtual site visits instead of having to fly to and over the locations in person. Nearmap listed on the ASX in 2000.
At the company’s annual general meeting in November, Nearmap forecast ACV growth for the 2021 financial year in the range of 20–40%. At the time, Nearmap’s CEO Rob Newman said:
People still need to insure homes, local governments still have to provide services and people’s roofs still need to be fixed… The capital raise in September is setting us up to accelerate growth and we see fiscal 21 as the way to build the foundation to scale rapidly.
We’re seeing this year as a foundational year to return to 20 per cent to 40 per cent year-on-year growth.
2021 hasn’t been off to a great start for Nearmap shareholders, with the share price down 11.9% year-to-date at the closing bell yesterday. That compares to a 0.1% gain for the broader All Ordinaries Index (ASX: XAO).
With this morning’s gains tallied in, the Nearmap share price is down 9.3% since 4 January.
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Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia has recommended Nearmap Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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