Growth Focus: Nearmap Ltd (NEA)

by Patrick Taylor

Date of Data Capture: 13/6/2017


Classification: Software & IT Services

Current Price: $0.575

Market Capitalisation: $210M

Forecast Sales Growth: 37.53%

Estimated Gross Yield: 0%

Consensus Price Target: $0.77

# Covering Analysts: 3

Discount at Current Price: 33.91%

Price Target Trend: Increasing Flat

Signal Timeframe: Quarterly-Monthly-Weekly

Trend Bias: Up Flat; Long-Medium

Short-term: Positive Neutral
Medium-term: Positive
Long-term: Positive Neutral

Recommendation: Buy

Focus: Capital Growth

Set up Notes:
• NEA is moving out of a sharp 50% consolidation bolstered by good news and a successful bounce off 50c support - with excellent forecasts and strong signalling of a reversal this looks like an attractive entry to an exciting growth stock.
• Expect volatility but the story is backed by good fundamentals with the last set of results showing strong growth in revenue, profits and earnings with continued sales growth expected through to 2018 as they move into profit.
• Momentum is building here with overhead resistance targets sitting at 65, 80 and 95c while support layers down from 55 and 50c from here if needed, with some last line support at 45c.

Growth Focus: Nearmap Ltd

Our primary focus here is capital gain, we will select our stocks from the ASX top 500 All Ordinaries Index.

Sometimes you need to see the lay of the land in order to find the best place to invest your funds, and here we are bringing our resolution into fine focus with Nearmap Ltd (NEA). This highflying photomapping specialist fell back to earth during the end of 2016 but recent strong reporting gives us the inclination that they may yet show the strength of Atlas and reach once more for the heavens.

Arriving on the map late in 2000 and based in Sydney, Nearmap provides highly detailed photo maps and geospatial location content to corporate clients (like property developers and project planners) to government clients (ranging from public transport and water utilities). NEA maintains excellent margins and is performing above expectations, they hold a strong cash position and now have forecasts that are streets ahead of their current standing, all combining to showcase their powerful scope for further growth.

A close-up inspection of NEA shows much of their revenue is still coming from their Australian operations, despite their having heavily invested in their US operations, which is the biggest dark cloud on their horizon. This is beginning to improve and is easily the most promising market for them and where they could be a titan in their field. Additionally, their near completion of New Zealand photomapping should pave their way into another choice market.

Investors have had to shoulder the weight of extreme volatility in NEA for most of their listed life as they have ranged strongly upwards from their early pricing at 10c to recent highs reaching a top-of-graphic price of 96.5c in October 2016. The well-earned price consolidation that followed that peak was amplified by a capital raising at 70c in November 2016, leading into an abysmal eight months where the price fell by over 50%, declining to a March 2017 low of 43c. Since then we have seen the price work off structural support at 50c and successfully break through their overhead dynamic resistance cluster between 50 and 55c just this week - opening them up to blue skies above.

Nearmap represents a growth story with plenty of room to move, backed by growing performance and exciting forecasts that paint a pretty picture. With technical momentum building across key timeframes and fresh positive signalling coming through as the price breaks through resistance, it could be a good time to snap up some NEA before they zoom off once again.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

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