If you are looking for some new portfolio additions, then it could be worth considering Polynovo Ltd (ASX: PNV) shares.
That's the view of analysts at Bell Potter, which have just upgraded the ASX 200 healthcare stock to a buy rating.
What is this ASX 200 healthcare stock?
PolyNovo describes itself as a disruptive medical technology company. Its products aim to simplify the management of acute complex wounds, redefining healing with meaningfully differentiated patient outcomes across multiple wound etiologies.
Its key product is NovoSorb BTM. It is a dermal scaffold for the regeneration of the skin when lost through extensive surgery, trauma, or burn. NovoSorb is a novel range of bio-resorbable polymers that can be produced in many formats including film, fibre, foam, and coatings. The company notes that its unique properties provide excellent biocompatibility, control over physical properties, and a programmable bio-resorption profile.
Broker upgrade
Analysts at Bell Potter were pleased with the company's performance during FY 2024. In response to its results, the broker said:
Product revenues increased by 54% in FY24 driven by expanded market share in the US which grew revenues by $22m in absolute value to $68.7m and remains by far the largest market. The ongoing absence of the key competitor (Integra) in the market for dermal matrix products has provided a once in a lifetime advantage for PNV who will continue to fill the void until at least mid CY2026. As had been expected PNV earned a maiden profit in FY24 at EBITDA of $3.0m and NPAT $5.2m, albeit the latter included a $3.5m tax benefit.
In light of this, the broker has upgraded the ASX 200 healthcare stock to a buy rating with an improved price target of $3.00 (from $2.52). Based on its current share price of $2.49, this implies potential upside of 20.5% for investors over the next 12 months.
The broker then concludes:
FY25 revenues remain largely unchanged, however, we now expect PNV will expand its direct sales force in the US by at least 25 to 30 heads in order to maximise market share while Integra remains off the market due to production issues at its Boston plant which makes the Primatrix and Surgimend products. FY25 earnings are downgraded due to the inclusion of additional cost in R&D and marketing headcount. FY26 revenues are upgraded by 8%. Valuation is increased by 19% to $3.00 (from $2.52) and we upgrade our recommendation to Buy.
