The PolyNovo Ltd (ASX: PNV) share price has continued its poor run on Monday.
In afternoon trade, the medical device company's shares are down a further 1% to $1.36. This means the PolyNovo share price has lost almost two-thirds of its value in 2021.
This poor form has been driven by a weaker than expected performance in FY 2022 and the unceremonious exit of its CEO last month.
All in all, this has attracted high levels of short interest, making PolyNovo shares one of the most shorted on the Australian share market.
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Where next for the PolyNovo share price?
While short sellers clearly believe the PolyNovo share price can go even lower from here, there is reason for shareholders to be a little optimistic.
According to a recent note out of Macquarie Group Ltd (ASX: MQG), its analysts are sticking with the company.
That note reveals that Macquarie has an outperform rating and $2.85 price target on the company's shares.
Based on the current PolyNovo share price, this implies potential upside of greater than 100% for investors over the next 12 months.
Although Macquarie acknowledges that PolyNovo is underperforming its expectations so far in FY 2022, which has led to a sharp reduction in its earnings estimates, it remains positive on the future.
This is due to its belief that PolyNovo is well-positioned for growth over the medium to long term thanks to the NovoSorb product. Particularly as the company looks to expand its use into other areas such as the hernia repair and breast augmentation markets.
These are much larger opportunities than its current target market of dermal scaffolds (worth $1.5 billion per annum) and are estimated to be worth US$3 billion per annum each at present. Overall, this gives the company a $7.5 billion per annum market opportunity to grow into in the future if all goes to plan.
Though, judging by the PolyNovo share price performance, investors aren't feeling overly confident about its prospects at this point. Time will tell whether short sellers or Macquarie made the right call.
