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Matterport: Expectations Were Too High but Big Opportunity Still at Play
Stock Analysis & Ideas

Matterport: Expectations Were Too High but Big Opportunity Still at Play

For companies jumping on the SPAC bandwagon, taking the blank check route into the public markets in 2021 proved a trial by fire. There are plenty of newly listed stocks which have suffered as the market soured on the speculative nature of many of these names. Or at least in the case of Matterport (MTTR), the stock turned negative on what Berenberg analyst Gal Munda calls “over-stretched initial growth expectations.”

In fact, given “materially lower near- and mid-term growth prospects and continued heavy investments in sales and marketing,” the analyst has now “significantly” lowered his price target for the spatial data company – from $25 to $12. Still, such has been the pullback (down by 66% year-to-date), there’s 70% upside from current levels. Importantly, Munda’s rating stays a Buy, as the analyst’s research “supports a significant mid-term opportunity.” (To watch Munda’s track record, click here)

That opportunity in the near term, however, is unlikely to be down to any “metaverse-related tailwind” while the Covid-related push has now expired too. The result of which will be “much slower growth for FY22 and FY23 than initially expected.”

That said, the analyst believes the new expectations have now been digested by the market, and as such, Munda sees “limited downside from here.”

And there still is a big opportunity in the residential real estate sector. This is a sizeable “untapped” market where the penetration rate is still only between 6–8%, and promisingly, over the past six months, Matterport has been growing its market share.

While growth has so far been reliant on the real estate opportunity, Munda thinks that over time the the AEC (architecture, engineering and construction) market will also “add materially to subscription growth.” General contractors (GCs) which have used the company’s services during construction stages have pointed to the “value” of the company’s models which allow for “quick scans to be used for inspection and documentation purposes.” These opportunities, with the addition of “adjacent verticals” suggest there’s a SAM (serviceable available market) worth around $1.7 billion.

The rest of the Street unanimously supports Munda’s take; all 6 reviews on record are positive, making for a Strong Buy consensus rating. All see plenty of gains too; going by the $13.67 average target, shares will climb 93% higher over the one-year timeframe. (See MTTR stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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