After its recent surge, the Polynovo share price is down 8% this week. Is it a buy?

Polynovo shares have moved in circles over the past week.

| More on:
A female scientist sits at her desk looking stressed out while working in an AnteoTech lab.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Polynovo shares are up 2.53% to $1.215 during late Friday afternoon trade 
  • The company has been heavily targeted by short sellers despite a series of insider buying action 
  • Macquarie sees Polynovo shares as an attractive upside, while Wilsons has a different view 

The Polynovo Ltd (ASX: PNV) share price has retraced this week despite insider buying from the company’s chair, David Williams.

After hitting a 3-month high of $1.413 earlier this month, the medical device company’s shares are failing to gain traction.

In fact, this week alone, Polynovo shares are down 8.3%.

This comes regardless of its shares travelling 2.53% higher to $1.215 apiece.

Let’s take a look and see if Polynovo shares are undervalued at current prices.

Polynovo shares in bargain territory?

The investor sentiment on the Polynovo share price has been mixed due to the inconsistent performance of the business. This has ultimately attracted a large number of short sellers to the company’s registry.

Short-selling is a common trading strategy that aims to profit from the fall in the price of a security. The goal is for an investor to borrow shares and sell the shares, and then buy them back at a lower price for a profit.

Last week, the Australian Securities & Investments Commission (ASIC) released its short position report revealing the level of short interest within companies.

As such, Polynovo remained in the top 10 list with 11.27% of its shares being shorted by investors.

In comparison, ASIC reported a short interest of 5.26% in Polynovo last year on 20 May. This is 50% less than where its shares are shorted today.

Given the large increase in short positions being taken up, investors might be concerned about the company’s inconsistent performance.

A couple of brokers rated the company’s share price with varying price points in late February.

The team at Macquarie cut its 12-month price target for Polynovo shares by 44% to a $1.60 apiece. This implies an upside of 31.6% from where the company’s shares are trading today.

Furthermore, analysts at Wilsons dropped their outlook on Polynovo shares by 22% to $1.11. It appears that the broker is almost on the mark as to where the medical company’s shares are valued at.

Polynovo share price summary

When looking at year to date, the Polynovo share price has lost 20% in value for shareholders.

However, in the past 12 months, its losses have magnified by around 53%.

Based on today’s price, Polynovo presides a market capitalisation of about $777.48 million.

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. has positions in 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 Scott Phillips.

More on Healthcare Shares

Two researchers discussing results of a study with each other.
Healthcare Shares

Looking to buy CSL shares? Here’s what to watch when the biotech company reports this week

Here’s what might be around the corner for CSL this earnings season.

Read more »

A scientist examining test results.
Healthcare Shares

Why did the Opthea share price dive 9% on Monday?

The biopharmaceutical company has announced new share issue arrangements.

Read more »

A disappointed female investor sits in front of her laptop and puts her hand to her forehead and closes her eyes in disappointment over share price falls
Capital Raising

Paradigm Biopharmaceuticals share price freefalls 27% following $66m cap raise

Paradigm shares have erased all of last week's gains...

Read more »

A woman stands facing a set of shelves that is completely empty.
Healthcare Shares

The ASX 200 company selling everything it makes due to its major competitor being out of the market: fundie

ResMed is performing strongly right now.

Read more »

a young woman props her hand under the face as she pokes her head out from under a luxurious doona in a bedroom decorated with flowers and a stylish lamp.
Healthcare Shares

Resmed share price dips despite profit and dividend boost

Profits and dividends are up, so why is the Resmed share price down?

Read more »

A sad looking scientist sitting and upset about a share price fall.
Earnings Results

Avita share price dives 16% on net loss

The medical technology company's shares are falling following today's financial results

Read more »

A man waking up happy with a smile on his face and arms outstretched representing the hefty Adairs dividend yield
Earnings Results

ResMed share price on watch following solid FY22 growth

ResMed has released its full year results...

Read more »

Female doctor with a mask holds out hand in a stop gesture.
Capital Raising

Up 90% in 2 weeks, here’s why the Paradigm share price has been halted

The biopharmaceutical company is planning a capital raise.

Read more »