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.