The Polynovo (ASX:PNV) share price has lost 35% this year. Is now the time to buy?

Shares in the ASX medical device company have been on a long downward run.

Key points
  • Polynovo shares edge around the $1.00 mark today
  • The company produced a mostly positive performance for H1 FY22, however, its share price has been on the decline
  • A couple of brokers give their take on the value of Polynovo shares

The Polynovo Ltd (ASX: PNV) share price has been on a disappointing run over the past few months. The medical device company's shares have dropped 15% in the past month, and 35% in 2022 alone.

At the time of writing, Polynovo shares have nudged over the $1.00 mark, trading for $1.01, a gain of 0.5%.

A doctor in a white coat sits at her computer with finger on mouth thinking about something in her office with medical equipment in the background.

Image source: Getty Images

What's happened to Polynovo recently?

In late February, Polynovo released its interim results for FY22, highlighting mostly strong numbers across the board.

Total revenue increased by 41.9% to $18.15 million over the prior corresponding period, underpinned by growth in key markets. This included the United States, up 58% to $14.2 million in sales.

However, on the bottom line, Polynovo achieved a net loss after tax of $1.7 million when not factoring in non-cash items. This consisted of unrealised forex gain/(loss), depreciation & amortisation, and share-based payments.

The overall result fell short of market expectations, leading the company's shares to fall 3.32% on the day. At the end of that week, its shares had sunk around 14%.

What do the brokers think?

A number of brokers weighed in on the Polynovo share price following the company's H1 FY22 financial scorecard.

The team at Macquarie cut its 12-month price target for Polynovo shares by 44% to $1.60.

It appears the broker is acknowledging Polynovo is underperforming its expectations for FY22 but predicts the business will make a turnaround. This is in particular for its NovoSorb product which is poised for growth in the medium to long term.

In addition, Wilsons put out a more bearish tone, slashing its outlook by 22% to $1.11. Its analysts believe that the medical company's shares are overvalued.

Based on the current Polynovo share price, this implies an upside of almost 12%.

Polynovo share price summary

Over the last 12 months, Polynovo shares have continued to decline with a loss of more than 63% in value.

This is a sharp contrast from when its shares hit an all-time high of $3.19 in April 2021 amid positive investor sentiment.

Today, Polynovo shares trade around the $1.00 mark.

The company presides a market capitalisation of roughly $664 million and has approximately 662 million shares on its books.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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