Are Nearmap Ltd shares a bargain? May 4, 2017 Aerial-mapping...

Are Nearmap Ltd shares a bargain?

May 4, 2017


Aerial-mapping business Nearmap Ltd (ASX: NEA) announced today that it has mapped approximately 72% of the New Zealand population and already generated sales from existing clients for access to the mapping products.
New Zealand is a small market but probably has potential to make a reasonable contribution to revenues over the long term and as the company noted the relative ease with which it mapped the country demonstrates the scalability of the business model.
However, Nearmap’s potential is now heavily tied to its success across the Pacific in North America where it has been investing heavily to build a profitable business in the giant U.S. market.
Nearmap reckons the aerial imagery market could be worth around US$4.5 billion by 2025, although the value of the company’s annual contracted sales in the U.S. currently stands at a rather modest $5 million. It’s the lack of growth in the U.S. given the heavy investment that is probably worrying investors given the share price has been falling recently.
However, Nearmap is in sound financial health with plenty of cash on its balance sheet after a recent capital raising at 70 cents per share. It also has a profitable Australian business that is still growing at impressive rates and has the operating cash flows to fund the growth of the U.S. business.
I rate the stock as a speculative buy at 50 cents, although investors should be aware this is a high-risk / high-reward play as the company is vulnerable to competition and the changing technological environment.

http://www.fool.com.au/2017/05/04/are-nearmap-ltd-shares-a-bargain/