Nearmap issues “well known”: CitiCiti analyst Siraj Ahmed says a number of issues raised in the short report from J Capital Research relate to past execution issues in the US - scaling sales and marketing, customer churn - which are “arguably well known to the market”.“With additional hiring in sales and marketing staff and the investment in product/content this time around expected to be more measured/incremental, we see the risk of scaling too fast as less likely and also see the vertical focus and additional investment in operational systems to support growth as positive,” he says.His says some of Nearmap’s largest US customers say its roof geometry solution is seen as superior, with materially faster turnaround times than existing solutions, helping the customer gain market share in the residential roof reports market, and that Nearmap’s coverage frequency and more recent imagery in metropolitan areas is seen as a differentiator.“Customers did point out the need to expand the coverage program to rural areas,” he said. “Nearmap is expected to expand its coverage in CY21e along with the introduction of HC4, which in our view could help increase Nearmap’s market share.”“While one customer highlighted that Nearmap’s post processing may not be as good (images a bit grainier), image quality did not stop the customer from signing up with Nearmap.Further, the consistent capture methodology across the US was seen as a strength (especially to develop machine learning programs) when compared to regional competitors.”He keeps a Buy rating but trims his target price 5pc to $3.00 after trimming his FY21-FY23 EBIDTA estimates by 6-8pc, primarily due to the higher Australian dollar.NEA is due to respond to JCAP’s report and release its results on Monday.
NEA Price at posting:
$2.16 Sentiment: Buy Disclosure: Held
