The Polynovo Ltd (ASX: PNV) share price is currently trading 7% higher at $1.18 after levelling off of its intraday peak of $1.21.
While there's been nothing remarkable out of Polynovo's camp, the healthcare sector is staging a comeback rally today, showing signs of life once more.
Over the past week, Polynovo shares have surged 17% and are now up around 9% for the previous month of trade.
Why is the Polynovo share price so healthy today?
The biotech company's shares are surging along with the broad healthcare sector today.
The S&P/ASX 200 Health Care index (XHJ) is currently up less than 1% today and around 2% over the week after sliding hard at the restart of trade in January. It is still down 10.5% despite staging a recovery these past 2 weeks.
Short interest had been high on Polynovo up until this week, with up to 9% of its float designated to short sellers on 21 March.
As a ratio, short interest peaked for the company's shares in December last year, at a ratio of 59.8. It has since fallen to just 14.7 at the time of writing.
The ratio is an important one in understanding the amount of selling pressure on a stock by gauging how many days it takes short sellers to repurchase their shares in the market.
If the number is high, it suggests that market pundits are bearish on the stock whereas the ratio is lower when investors are more optimistic.
In fact, just this week, the ratio has crept down 9.74 points to its current level, which suggests the market is turning more bullish, Bloomberg data reports.
Analysts are bullish too. Half of those covering the share say to buy Polynovo at its current share price, whereas the other 50% say it is a hold.
Macquarie is heavily bullish and values the company at $1.60 per share, baking in large expectations around the company's NovoSorb sales.
The consensus price target on Polynovo is at $1.58 per share, suggesting an upside potential of 34%.
Polynovo share price snapshot
In order to return to the share price's previous highs, the company has some serious earnings growth to produce, or investors have to pile in by the boatload. The Polynovo share price has dropped 58% in the past 12 months and is down 22% this year to date.
This suggests it must return around 150% to overcome its 12-month loss and return to its previous high.
