Is it possible that the Polynovo Ltd (ASX: PNV) share price could rise to $3 by Christmas?
One broker thinks that the healthcare business could rise by more than 50%.
But how quickly could that return come? An early Christmas present?
Brokers have price targets on a wide array of businesses. That's where the analysts believe that the shares prices could be in 12 months from now. Whilst it's possible that shares can move in shorter-term timeframes, the broker's latest price target on Polynovo is referring to where it will be in the latter stages of 2022.
What is the price target on the Polynovo share price?
The brokers at Macquarie Group Ltd (ASX: MQG) have a price target on Polynovo of $2.85, which is not far off $3. Macquarie rates Polynovo shares as a buy.
Macquarie thinks that the business has a good future with hopes of pleasing growth in the coming years, though FY22 may not be as good because of the ongoing impact of the COVID-19 pandemic on the company. It was the FY22 first quarter update that gave the broker food for thought.
First quarter update
The managing director of Polynovo, Paul Brennan, said:
A strong start to the first quarter of FY22 follows the strong fourth quarter finish in FY21 despite continuing COVID restriction in the southern States of the US. Our teams are expanding and signing new accounts and as patient access improves, we expect this will translate into strong sales.
The business reported a COVID-impacted performance in Australia, New Zealand and the US.
Here in the ANZ market, it said that Australia and New Zealand results were impacted by the extended hard lockdowns in New South Wales and Victoria. It's expecting sales to improve in the second quarter as COVID restrictions reduce. The company said that new accounts in its direct markets (excluding distributor markets) in the first quarter of FY22 were up 56% year on year.
The company had the most positive comments about the European section of the business.
It noted that face to face meetings are back, conferences are being attended and hospital access has returned to near normal levels. It's expecting to sign new distributors in the second quarter of FY22, including Cyprus and the Czech Republic. Other jurisdictions such as France and Portugal are in negotiation.
Polynovo said that the EU performed well with growth of 204% in the first quarter.
A new third-party distribution centre in Belgium is operational and filling sales orders with deliveries to Germany, Finland and an order from Italy being filled this week. The company also said that there are indications that orders will commence soon to other distributors in Poland, Turkey and Greece.
Finally, Polynovo said that the relaxation of COVID restrictions in the UK and Irish hospitals has been positive for the business, whilst also being helped by some clinical trials. First quarter sales were up 327% on the same quarter last year.
What is the Polynovo share price valuation?
Macquarie thinks that Polynovo could generate 2.5 cents of earnings per share (EPS) in FY23, translating to a price/earnings ratio of 73 for FY23.
