Matterport Inc (NASDAQ:MTTR) shares are receding on Friday after an analyst at Piper Sandler tempered his expectations concerning the spatial data company.
The Matterport Analyst: Weston Twigg maintained an Overweight rating for Matterport shares but reduced the price target from $10 to $7.
The Matterport Thesis: Matterport is a "speculative and volatile small-cap cloud software play" with raw potential as the leader in the emerging new spatial data market, analyst Twigg said.
The company, however, faces execution risks in the short run, the analyst said.
Twigg sees risk stemming from moderating housing industry trends due to the company's residential exposure of over 60%. The company will also be constrained by the camera supply chain challenges, the analyst said.
Additionally, the analyst sees a widening of operating losses due to an expanding employee base, as the company invests ahead of a promising number of new spatial data use cases longer-term.
Matterport stock's 71% year-to-date decline, according to the analyst, underlines near-term risks and volatility associated with a nascent model that faces increasing growth challenges.
"With no clear catalyst over the next couple quarters, volatility could remain high but with $580M in cash reserves we remain optimistic that a leadership position in spatial data and improving growth levers later this year could create a more promising 2023," Piper Sandler said.
MTTR Price Action: Friday morning at publication, Matterport shares were slipping 0.017% to $5.95, according to BenzingaPro data