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Why Nearmap’s share price could rise even more after gaining 17%

Even though Nearmap’s share price rose by as much as 17.8% today, analysts from the Royal Bank of Canada believe that the stock still has room left to run.

Nearmap share price in focus Source: Bloomberg

Nearmap share price: is there more left in the tank?

The Nearmap share price skyrocketed as much as 17.8% during today’s session, following the release of information from company’s annual general meeting (AGM).

It’s been a volatile year for Nearmap (ASX: NEA) investors, with the share price rising to all-time-highs in June before essentially falling off a cliff.

Yet it was likely the company revealing robust Annual Contract Value (ACV) FY20 projections and the potential of growing its North American business that sparked investor enthusiasm today.

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Growth in focus

Centrally, Nearmap today provided the market with guidance on its estimated Annual Contract Value (ACV) for the 2020 fiscal year. Here it was noted that:

'FY20 Group ACV portfolio [is] expected to be in line with consensus forecasts of between $116m to $120m.’

For reference, in FY19 Nearmap brought in $90.2m in ACV.

Maybe more importantly however, the company is looking to accelerate its growth opportunities in North America.

In step with this, 'sales and marketing investment continues to ramp with returns expected to accelerate in 2H20.'

On a more granular level, Nearmap does indeed look well supported to pursue an aggressive growth agenda, with the company’s Chairman, Peter James reiterating during today’s AGM that Nearmap’s recent $70m cap-raise provides the company with ‘flexibility to accelerate our strategic objectives.'

Growth plans are also supported by 'evolving industry dynamics' in North America, says the company.

RBC analysts believe Nearmap could rise further

Royal Bank of Canada (RBC) analysts took today’s AGM update as a chance to reiterate their bullish share price target of $4.00 and an ‘outperform’ rating.

At Nearmap’s (ASX: NEA) current price levels, such a share price target would imply potential upside of 39%.

Centrally, RBC analysts viewed Nearmap’s projected ACV FY20 estimates as a key positive, while also noting that it expected the company to remain a leader in Australia – even as competition heats up.

Specifically, RBC believes that the size of the Australian market is large enough to support between two to three key players, of which the investment bank expects Nearmap to remain number one in the medium to long-term.

RBC was also impressed by the company’s deeper vertical penetration, commenting on Nearmap’s OpenSolar partnership as a key positive.

Other thoughts

As part of today’s AGM, Nearmap also flagged the following:

'To be more aligned with the reporting practices of our peer group, the Company will no longer be pre-releasing some of our unaudited half year and full year results in January and July.'

In contrast, Nearmap will now only release fully audited results in both February and August.

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